by Kira Te'for

Created on: January 16, 2008

When researching how to calculate the costs of buying a home, you may come across many sources that are full of terms that are lengthy and hard to understand unless you have been previously educated in, or had some experiance in, finance. This can be very daunting and overwhelming.
This article is designed to give you all the basic factors that you need to consider, in a way that is simple and easy for anyone buying a home to understand.

When buying a home there is much more than just the cost of the actual home to consider, in fact you will probably be looking at spending many thousands more dollars than you had at first expected.
To get a good idea of the real cost, you will need to look at these six major factors: monthly costs, lender fees, stamp duty, mortgage insurance, legal fees and moving costs. Taking these into account will help you to calculate the cost of buying a home, without being lumped with a loan much larger than you had at first expected.

Monthly cost

You will have probably have found out how much the bank is willing to lend you, but have you sat down and worked this out as a monthly or weekly cost? The bank may have asked about existing loans and yearly income, but what they don't ask about is other large monthly expenses you may have like school fees, health insurance, or even large phone bills. On top of these you will have to pay rates, water, electricity, building insurance and contents insurance which, if this is your first home, you may not have had to pay before. All these costs need to be factored in to make sure you can afford the monthly repayments after all these expenses have been taken out.

Lender Fees

It depends on which lender you go through as to what kind of fee you will have to pay, but you will generally find that they will charge an establishment fee of around $500 - $1000. Many lenders have promotions or special loans where the establishment fee is waived, but do look carefully into these to make sure you will not be paying even more in other hidden costs. On top of this there is generally a fee of around $250 for the lender to inspect the property and make sure it is really worth what you are paying. Doing a lot of research about different lenders, or going to a company that will research for you, can save you a few hundred dollars, which, when calculated with interest over 25 years, can add up to a lot.

Stamp Duty

This is usually one of the biggest extra costs on top of buying a home. Depending on where you live, the stamp

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