These often start with a lower "teaser" rate for a few years, but then the rate fluctuates based on the market. It’s a gamble that can pay off if you plan to sell quickly, but it’s risky if rates climb. 3. The Hidden Costs (The "PITI" Formula)
Your interest rate never changes. If you start at 6%, you stay at 6% for the next 15 or 30 years. It’s predictable and safe.
Your monthly check to the bank isn't just paying back the house price. It’s usually a bundle called : Principal: The actual balance of the loan. Interest: What the bank charges you to borrow the money. Taxes: Property taxes collected by your local government. Insurance: Homeowners insurance to protect the asset. 4. Getting Pre-Approved buying a house mortgage
While the "20% down" rule is the gold standard (it helps you avoid private mortgage insurance), many programs allow for as little as 3% or 3.5% down. 2. Choosing Your Loan Type
Not all mortgages are built the same. The two most common paths are: These often start with a lower "teaser" rate
Don't buy the most expensive house the bank says you can afford. Buy the house that fits your actual lifestyle and monthly budget.
This is your financial "reputation." A higher score usually unlocks lower interest rates, which can save you tens of thousands of dollars over the life of the loan. The Hidden Costs (The "PITI" Formula) Your interest
Once your offer is accepted, you enter the "underwriting" phase where the bank double-checks everything. On closing day, you’ll sign a mountain of paperwork, pay your closing costs (usually 2–5% of the home price), and finally get the keys.