Your Dream Home Starts Here: Navigating Mortgage Costs with Blaze Credit Union

Provided by Blaze Credit Union

April 4, 2025 at 7:11PM

Have you found yourself frequently searching MLS listings? Maybe your free time is spent drafting ideal house plans? These activities might be a sign you’re ready to start your homebuying journey.

While knowing where you want to live and the type of home that will best suit your needs is a good place to start, understanding the costs will help you determine your purchase options.

Down Payments

The cost of purchasing a home largely depends on your location and the type of home you’re buying. Regardless of your budget, there are certain expenses you’ll need to consider for any home purchase. First, you’ll need funds for a down payment. The down payment is typically a percentage of the home’s total price. For first-time buyers, down payments can be as low as 3-5%. However, some programs require even less for a down payment. Blaze Credit Union offers a 1% down payment option for qualified first-time homebuyers. A Blaze mortgage loan officer can help you explore available options based on your specific situation.

Buyers are encouraged to put down 20% to avoid paying for private mortgage insurance (PMI). PMI is a protection for the lender against you defaulting on the loan. If you put down 20% or more, you won’t need mortgage insurance. If your down payment is less than 20%, you’ll need to plan on an additional cost of up to a few hundred dollars each month on top of your regular mortgage payment.

Mortgage and Fees

To know what you can afford, you’ll want to get preapproved for a mortgage. Preapproval is not a guarantee you will qualify for a mortgage, but when a lender looks at your income, assets, and credit score, they’ll give you an idea of the types of loans you qualify for, how much you can borrow, and potential interest rates.

Your mortgage payment depends on the principal amount borrowed, the interest rate for borrowing the money, and the term or length of the mortgage. Typically, lenders want your mortgage payment (including PMI, property taxes, and homeowners’ insurance) to stay below 28% of your gross monthly income. As part of the preapproval, lenders assess other debts, like car and credit card payments, but they don’t consider how much you spend on other bills or expenses.

Qualifying for a specific payment doesn’t necessarily mean you should make a purchase that requires the full amount. It’s up to you to decide how much of a margin you need to keep in your budget to feel financially secure. First-time buyers may want to look for a home on the lower end of what you’re told you can afford.

Real Estate Agent Fees

Many homebuyers use a real estate agent to purchase a home. Agents know the market and price trends, know which neighborhoods and features are most desirable, and can help with price and contract negotiations. Real estate agents are typically paid a commission of 5-6% of the purchase price. However, the seller typically pays the real estate commissions.

Closing Costs

Before a home is officially yours, you’ll need to finalize the sale and sign the many required documents. Closing costs are due when you complete the final paperwork. These are one-time costs you can either pay upfront or possibly roll into your mortgage. Closing costs cover all the expenses of applying for the loan and securing the sale. They typically run between 2-5% of the overall purchase price. Your closing costs may include fees for services required by your mortgage lender, including:

  • Property appraisals
    • Title search
      • Title insurance
        • Origination fee
          • Underwriting fee
            • Points

              To Buy or Not To Buy

              The costs associated with buying a home can be overwhelming, but there are ways buying a home may save you money. These include:

              • Deducting mortgage interest and property taxes on your federal tax return
                • Building equity as you pay down your mortgage and having access to that equity via a home equity line of credit (HELOC)
                  • The potential to profit if the value of the home increases and you decide to sell

                    Make Your Dream Home a Reality with Blaze

                    No matter where you are in your home ownership journey, Blaze Credit Union’s mortgage team will be with you at every turn. Blaze offers a variety of loan options, including fixed rate mortgages, adjustable rate mortgages (ARMs), FHA loans, and more. Our Minnesota-based loan officers, decision-makers, and servicers make buying a home local and personal. To help make the process more affordable, Blaze is waiving the origination fee – a savings of $1,695 – for applications submitted between April 1 and May 31, 2025. Connect with your Blaze mortgage loan officer today to explore the best options for your homebuying needs.

                    Blaze Credit Union is an Equal Housing Opportunity Lender and Insured by NCUA

                    blazecu.com/mortgage