The bottom line

First-time buyers often make the mistake of thinking that home ownership only involves sending out a check for the monthly payment on time. While your monthly payments do represent the bulk of the cost of your mortgage, there are other costs that contribute to the bottom line. All of these factors must be accounted for in order to get the best mortgage rate.

The first thing that you will find is that the upfront costs of buying a house can be staggering. The down payment, which averages 20 percent, can actually be anything above three percent. All in all, this amount of money represents a large chunk of change for the borrower. Yet, the best mortgage rates are reserved for those capable of making sizeable down payments.

Before you ever begin making monthly payments, you will also have to deal with closing costs. These costs include all kinds of fees, such as points and processing fees. While the specific amount varies, closing costs can amount to a whopping seven percent of the price tag. The best mortgage rates are available to borrowers who can pay points, which is also called buying down the interest rate.

And don’t forget the money you’re going to spend on maintenance. You can have the best mortgage rate known to man and still lose money on extensive repairs. For that reason, it is a good idea to give the house an extremely thorough going-over before you agree to closing on the deal.

When your lender estimates the monthly payment that you will be able to afford, considerations like upkeep are not factored in. It is your job to anticipate these costs and make sure that you have enough money and resources to pay for them.