Linda Grissette | St. Charles Real Estate, St. Peters Real Estate, O’Fallon Real Estate


Houses located in emerging or progressive areas under development could yield a rewarding financial return. These houses could also yield social rewards. During the early years of development, you might have to endure construction sites and noise. Several months or a year or two might pass before houses in the community fill with neighbors, people who may quickly become among your closest friends.

Hidden costs of buying a house

A place to call your own, great neighbors and a community that is growing and increasing your house's value can make buying a house a solid financial and personal decision. To truly be advantageous, you need to know everything that you're taking on when you buy a house.

The principal is the largest part of your mortgage. It's also the part of owning a house that you might pay the most attention to. What you don't want to do is make the mortgage principal the only part of the owning a house that you focus on. In addition to the principal, when you buy a house, you will likely have to pay expenses like those listed below:

  • Loan interest - Mortgages with adjustable rate interest can start low, but may not stay that way. A variable rate mortgage and a tracker mortgage are other types of mortgages that could increase should interest rates hike. A fixed rate might be higher, depending on when you buy a house, but a fixed rate mortgage could keep your monthly output steady.
  • Closing costs - Items included in closing costs are the first month's homeowners association fees, prepaid interest and points.The more points that you pay upfront, the more you could lower your monthly mortgage installments.
  • Mortgage insurance - Depending on the lender,you may have to pay mortgage insurance that covers 10% or more of your total mortgage. A way around the insurance or a way to lower the insurance is to invest more in your down payment.
  • Homeowners insurance - Mortgage insurance and homeowners insurance are different. Mortgage insurance protects the lender.Homeowners insurance protects you and the lender.
  • Homeowners association fees - Although homeowners association fees might be included in your closing costs, you will generally have to make these payments monthly. Don't overlook homeowners association fees and rules when you start looking for a house.
  • Property taxes - The value of your property, the age of your home and the jurisdiction that your house is located in impact property taxes.
  • Mortgage broker or realtor fees and commissions - These fees are higher in some parts of the country.
  • Home inspection - Factor in the costs of getting a thorough home inspection.
  • Home appraisal - You'll also need to get your house appraised to realize the actual value of the property.

Because there are additional costs that you must generally be responsible for after you buy a house, shop for property that you can easily afford. In other words, don't buy a house that leaves you with only $100 or less left each month after you pay your mortgage. After all, there are other costs involved in owning a house that you will surface during and after closing.


At a glance, buying a home seems like a daunting and complicated process. If it's your first time buying a home you're probably hearing a lot of terms that don't mean much to you like "rate commitment," "prequalify," and an array of acronyms that no one has ever really explained like APR and ARM. What many first time homebuyers don't realize is that the mortgage application process is relatively straightforward. It's a way for lenders to determine if they will lend money to the homebuyer. The lender will require some documentation on your part and you'll want to do your homework when it comes to choosing the right mortgage for you, but if you're confused about where to begin, here's everything you need to know about the home mortgage application process.

Gather your documents

Each lender will be slightly different when it comes to what records and documents they require from you. In general, lenders will require two years of work history, proof of income, and tax papers. They will also ask for your permission to run a credit check. Some things you should bring when applying for a mortgage include:
  • Your most recent pay stubs (at least two)
  • Your most recent W-2 forms
  • Completed tax returns
  • Bank statements
  • Gift letters
  • Debt - credit cards, student loans, etc.

Filling out the application

The actual application for the mortgage is pretty simple. Be expected to provide your personal and marital information, as well as your social security number. When you apply for a loan you'll also be determining if you're applying singly or with another person, such as a spouse. Some people apply jointly to seek a higher loan amount. However, you should be aware that if this is your plan of action the lender will require income and credit information from both of you. Keep in mind that it isn't easy to remove one person from a home loan once the contract is signed, so you should make certain of this decision before applying jointly.

Locked-in interest rates

It won't come as a surprise to you that, like in other industries, interest rates on mortgages fluctuate. For this reason, many home buyers attempt to "lock-in" their interest rate, meaning the lender is no longer allowed to change the interest rate after signing. The benefit of locking in your interest is that it can avoid having your interest rate raised before you sign on the home. The disadvantage is that since rates fluctuate, you could miss out on a lower one. This is also the difference between APR (annual percentage rating) and ARM (adjustable rate mortgage). With an APR, the cost of borrowing money (interest) is fixed. For an ARM, the interest rate can increase, decrease, or stay the same at different points in the repayment process.

Refinancing

Your financial situation is bound to fluctuate throughout your life, hopefully for the better. At some point down the road, it might make sense to refinance on your mortgage. Essentially this means you are agreeing to change the details of the mortgage to either accept a different interest rate or to alter the length of the loan term. Refinancing usually involves fees, however, so you don't want to rely on it too heavily as a fallback.



Loading