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Mortgage Fearbuster 5

Posted by  on Feb 08, 2010
 

Q: I'm buying my first home, and have to say I'm totally shocked at all of the extra costs. What the heck is mortgage insurance? I already thought I was paying for home insurance, so why am I paying for mortgage insurance?

A: We understand your concerns, but if you're putting less than 20% down on your new home, you'll have to pay for mortgage insurance (MI). This coverage protects your mortgage lender in the event you fail to honor the terms of your home loan agreement, which typically means failing to make payments. If your lender incurs a loss caused by your mortgage default, the lender files a claim and receives reimbursement from the MI company.

Q: My husband and I are shopping for a a condo, but are amazed at how much homeowner association fees can vary. What's the deal, and is buying a condo a good deal or not?

A: Many homeowners prefer the convenience of condo living, but convenience comes with a price. A Home Owner Associations (HOA) is the governing body of a condominium complex. It establishes rules and guidelines concerning the common areas of the complex and the exterior of the complex buildings. HOA dues are typically paid monthly and cover expenses for maintenance and repair of common areas and building exteriors. The cost of HOA dues is influenced by the number of units and services provided. When shopping for condos, compare all aspects of mortgage quotes, homes you're considering, and HOA fees and services.

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