If you’re preparing to buy your first home, you’re probably finding out that there are many complex concepts you’ll have to learn. One thing that’s important to understand is what’s involved in a mortgage. While you already know this is a loan for buying a home, this guide can give you a deeper understanding of a mortgage.
What’s in a Mortgage Payment?
The mortgage payment is a sum that goes to your lender, which is put towards repaying the amount you borrowed. While most of your payment will go towards the principal, or what you owe to the bank, some of it will also go towards paying the interest. As you shop for a lender, one of the things you’ll consider is the interest rate each lender offers. The higher the interest rate, the more you’ll have to repay to your lender.
As an example, you might buy a $200,000 home with a 20% down payment of $40,000. This will leave you with a $160,000 mortgage. If you’re paying 3% interest on your 30-year mortgage, you should expect a monthly payment of $1,146. Your payment will be applied to the principal and the interest. Depending on the type of loan you get, your bank may also create an escrow account for you, and then deposit money into it for your homeowner’s insurance and taxes. At the end of each year, your insurance and taxes will be paid from that account for you.
How Do Your Mortgage Payments Affect Your Financial Growth?
When you rent an apartment, the money you give to your landlord each month does nothing for you. However, when you pay on your mortgage, you’re actually building equity in your home. Each mortgage payment decreases the amount you owe and increases the amount of home you own. In the beginning, you won’t have any equity in your home, but, as you continue to pay, you’ll owe less and less. This will positively impact your credit rating, while also qualifying you for refinancing your mortgage, a home equity line of credit, and other types of loans.
The mortgage you’ll use to buy your home will help you build up an investment that will benefit you throughout your lifetime. Although the buying process is complicated with title insurance, home inspections, and other steps, owning your own home is worth getting through all of these challenges. It will help you create financial freedom for yourself and give you a place to call your own.
The largest demographic for purchasing a first home lies between the ages of 22 and 38, also known as Millennials. They comprise 38 percent of the first-time home-buying population. They are also different than older generations in that they have different wish lists and priorities and approaches when it comes to choosing and narrowing down their first home.
The first thing is to examine finances to confirm you are, in fact, ready to become a homeowner as opposed to a renter. You should definitely check your credit score and clean up any issues before approaching any financial institution about a loan. Take stock of all your income and expenditures. Do you have enough remaining to pay for a mortgage? Calculate the potential down payment you will be required to make. Keep in mind you will also have innumerable unforeseen maintenance and repair issues when it comes to homeownership. You will also need insurance, money for closing costs, and a moving budget, in addition to other expenses. Make sure you fully do your due diligence before beginning down the path of buying your first home.
Working with an agent might cost you more money, but they are a good buffer when it comes to negotiating deals and making offers. Make sure you check online reviews about agents in your area and be honest about your must-haves vs your wants so they can do the best search they can.
Millennials are being subjected to online media and television on a constant basis, and a lot of content shown is created by influencers trying to sell a product, image, or lifestyle. There are countless DIY and dream home and garden blogs and shows that they want to emulate, they tend to approach a first-time home buying experience with delusions of grandeur and visions of beauty and/or technological features that are not really practical. Often, these lists start big, then start getting smaller as they begin picking and choosing their most sought-after priorities until they eventually narrow down their choices to something more feasible. Anyone with buyer’s remorse will tell you that It is dangerous to fall in love with something that is outside of your price range. For this reason, the number one tip is to not look at a property with your heart but to look with your head. While it is true that you need to love where you live, it can be very easy to see a home through the tinted lenses of adoration while ignoring red flags like budgetary limits.
About Jason Cohen Pittsburgh
Jason Cohen is a real estate investor in Pittsburgh, Pennsylvania. He created Jason Cohen Pittsburgh, a group of real estate enthusiasts committed to helping others invest in real estate, and he has thrived in the area since 2002.
As Jason’s career has grown and flourished, so has Pittsburgh itself — transforming from an industrial “rust belt” city into a major cultural center abundant with high-end multi-family rental properties. Jason has seamlessly handled the dynamic nature of Pittsburgh and of the real estate industry in general. A research-driven professional, he consistently enables smart and profitable investments in the area, helping to transform modest properties into high-end rentals in Pittsburgh’s hottest neighborhoods.
Jason Cohen first entered the world of real estate shortly after his graduation from college. He started out by investing in distressed properties in Pennsylvania. After some experience working full-time for a real estate company, he decided to pave his own path in the industry. He has worked as an independent real estate agent and developed the Jason Cohen Pittsburgh team ever since. The team consists of highly qualified investors, property managers, leasing agents, and contractors.
Over the course of his career Jason has become highly proficient in acquisitions, joint ventures and partnerships, multifamily real estate investments, asset repositioning, real estate management, real estate brokerage, and new construction. He has excelled in high-level investment strategies, but is also no stranger to “ground work” when it comes to the industry. He is well-versed in each step of Jason Cohen Pittsburgh’s unique system: researching local areas and investing in properties, performing renovations to transform these properties from dilapidated eyesores into high-end units, and ultimately repositioning the properties for maximum profit in renting and selling.
Jason Cohen Pittsburgh is the group of choice for anyone who needs advice, analysis and due diligence, and general expertise in matters of investing, whether they are short-term or long-term. Jason Cohen Pittsburgh has dealt with properties in a variety of neighborhoods throughout parts of Pittsburgh, including the South Side, Oakland, Shadyside, Squirrel Hill, Mt. Lebanon, and Regent Square. Each and every one of these locations, paired with Jason’s overall knowledge of real estate investing, has allowed him to play a part in restoring Pittsburgh’s place as one of the most popular cities in the United States.
This blog will share news, updates, and insights regarding Pittsburgh and its real estate market from the perspective of Jason Cohen Pittsburgh. Stay tuned!