Mortgage Costs

Everything you need to know about mortgage costs.

There are upfront and ongoing costs associated with buying or refinancing your home. We help you fully understand them.

Upfront mortgage costs

Down Payment (Purchase Only)
Your down payment is the money you put down to buy your home. This amount goes towards your purchase price in the form of equity. The myth that you need to put down 20% to qualify is not true. First time home-buyers can put down as little as 3%, and with Rosegate, you only need to put down 10.01% to avoid mortgage insurance. The more money you put down, the lower your loan-to-value and total monthly payment will be.

Tip: Our licensed Loan Pros will assist you by recommending a suitable down payment based on your financial situation and goals.
Closing Costs
Closing costs are costs paid to third parties and are standard in all mortgage transactions, such as title/attorney costs, appraisal, taxes and escrows. Based on your situation, there may also be specific lender fees included, such as underwriting/commitment fees. You may also have an opportunity to obtain a lower interest rate by paying ‘points’. Points (sometimes referred to as a ‘buydown’) is simply a fee paid in exchange for a lower interest rate.

Tip: When applying for a mortgage, closing costs will be disclosed on your initial loan estimate – giving you an idea of the total amount you will need in order to buy your home.
Prepaids
When buying a home, you have to pay interest at closing for the remaining days of that month, beginning on the day you close. For example, if you closed on April 16th, you will have to pay 15 days of prepaid interest at closing for April 16th-30th. However, your first payment wouldn’t be due until June 1st, as monthly payments cover the interest from the previous month. Think of prepaid interest as the ‘rent’ for living in your new home during the month in which you close.

Ongoing mortgage costs

Principal & Interest
Principal is the amount you pay each month that goes towards your ownership/equity in the home. Interest is the cost you pay each month for ‘borrowing’ the money used to buy the home. You can pay what’s called a ‘principal curtailment’ in addition to your monthly mortgage payment that goes directly towards your equity. This is a great way to reduce the length of your term without needing to refinance your mortgage.
Property Taxes
Property taxes vary by city and county and are calculated as a percentage of your home’s value. Property taxes are mandatory and must be paid each year (some states collect twice/year). Many homebuyers choose to pay these alongside their principal & interest each month, rather than in one lump sum at the end of the year, this is referred to as ‘escrowing’.
Homeowners/Hazard Insurance
Homeowners Insurance is required to ensure the property is protected. Similar to property taxes, you can add these to your escrow/monthly mortgage payment.
Mortgage Insurance (If Applicable)
Mortgage insurance may be required if your down payment is below 10.01% or if you are getting an FHA loan. In some cases, once you hit 10.01% equity, you can have the mortgage insurance removed from your payment. FHA loans have an upfront mortgage insurance premium and an ongoing mortgage insurance for the life of the loan.
HOA Fees (If Applicable)
If you are purchasing a home that has a Homeowners Association, you will most likely have a monthly HOA association fee in addition to your mortgage payment. These fees are collected to pay for neighborhood services such as landscaping, maintenance, upkeep, amenities, etc. These fees are paid directly to the Association, and are not included in your monthly mortgage payment.

Where you and your new home meet

What do you want to do today?
  • No impact on your Credit Score.
  • No documents required.
  • Takes two minutes.