Our Real Estate Blog
When you’re buying a home, there’s a lot of excitement that surrounds the search and purchase of the property. In the process of buying a home, however, there are many things that buyers forget to take into account during their search and budgeting. Below, you’ll find some information to help you be prepared as a buyer to consider your home purchase from all angles without missing a beat.
The Expense Of Closing Costs
Remember that closing costs will be somewhere in the 3-5 percent range of the purchase price of a home. Amidst all of your savings, you’ll need to consider this a part of your expenses. Closing costs need to be paid upfront in most cases. You can roll your closing costs into the financing, but it depends on the circumstances. There are no guarantees that the lender will agree to it. Your realtor can also sometimes negotiate for the sellers to pay the closing costs, but in a seller’s market this is quite rare. Be prepared with your closing costs and understand how much you’ll need to spend so that you have an appropriate amount for the downpayment and the other expenses that you’ll incur during the process of buying a home.
The Cost Of Maintaining A House
Many buyers forget about all of the costs that they will need to pay for after they finish buying the house. In addition to a monthly mortgage payment, you’ll need to pay for things like utilities, routine home maintenance, furnishings, and more. If you completely deplete your savings for the purchase of the home, there’s not a whole lot of wiggle room for you to pay for additional needs in the house.
The Cost Of Furnishing And Decorating A Home
You may move into a home with a few pieces that you have previously owned. You could also need a lot of things from a bed to a sofa. All of these items can add up. You may even have to worry about little things like window shades, curtains, lamps, light bulbs, and more.
Home Repairs Can Cost A Pretty Penny
If something needs to be done in your home, the repairs can cost you quite a bit. If you’re not paying attention during the home inspection, you’ll be in for some surprises. That’s why you need a good realtor to help you through the process. A new roof can cost thousands of dollars. New appliances are an expense you should plan for. Other major work that needs to be done around the house can also dip into your savings significantly. As a buyer, you need to be prepared for any of these expected or completely unexpected costs.
If you’re getting ready to buy a home, you know it will be one of the most significant purchases of your entire life. However, are you fully prepared for all of the expenses that buying a home will bring? You don’t want to buy a house to find out that you can’t afford it after all.
Many expenses go into buying a home that you can plan for ahead of time. Other costs aren’t as exact that you will need to add in your budget. Read on to learn more about many of the expenses that throw first-time home buyers for a loop.
Closing costs encompass a whole bunch of expenses that you’ll incur buying a home. These include:
- Application fees
- Attorney fees
- Title insurance
- Recording fees
No matter what the closing costs include, you should plan for these expenses to be about 2-5 percent of the price of your home. Costs can vary widely, but it’s good to have a bit of extra cash on hand.
Maintaining Your Home
While most homebuyers are prepared for the initial costs of buying a home, they don't know how much it costs to maintain a home. Each year, things will come up on your property that needs to be addressed continually. These tasks include:
These routine tasks are independent of other costs like replacing a stove or fixing a furnace. Homeowners need to be prepared for these expenses as well.
Taxes can increase or decrease for any given year. You can lookup taxes in the area where you’re planning to buy a home in order to prepare yourself. You should make sure that your property taxes are comparable with that of other homes in your area.
Utilities are what your home runs on. Depending on the climate you live in the number of utilities you pay can vary. Take into account these things:
- Air conditioning
Most neighborhoods have one or two choices for services, so you can ask people in the neighborhood what providers they [refer and how much their bills are each month.
You’re required to have homeowner’s insurance when you get a mortgage. Even if you don’t take out a mortgage and pay cash for a home, it’s a wise decision to protect your investment. Estimate how much a yearly policy will cost you ahead of time.
This insurance will protect your property from things like theft and fire. You can shop around for the best rates based on policies that suit your needs. It’s easy to price out policies online. See where you can save including discounts for security systems or multiple policy discounts.
If you live in an area where floods or earthquakes are prevalent, you should be aware. You’ll find you need additional policies to cover damage in the event of these disasters. The most important thing about your homeowner’s insurance policy is that you check the details for all of the fine print.
You may have wanted to apply for a mortgage at some point but were put off by something negative someone said about this type of loan. Similarly, you may have been encouraged to apply for one based on some false information but met with a quick rejection. Some of the information that bred these misconceptions may not be false but has merely become outdated. Below are some of those misconceived ideas and the truth behind them:
1. You cannot get a loan with a bad credit score
While it is true that most traditional banks will consider you too risky if your score is below 620, other non-traditional lenders will listen to you. Those offering house loans backed by the Federal Housing Administration (FHA) can approve borrowers with a minimum score of 580. Remember, though, that lenders will cover the risk of lending to folks with a low credit score by fixing a higher interest rate. So you might want to clean up your debt before looking for a mortgage.
2. You have to raise 20% as a down payment
In the past, this was true. You had to stump up at least 20% of the value of the property before you approached a lender. Some would require up to 30%. These days you can find lenders who will only ask for 6% to get closing on your mortgage deal. FHA-backed loans will accept even 3.5%.
3. Being pre-approved and pre-qualified are the same thing
Being pre-approved is as almost as good as having the cash to buy a property. Before you get pre-approval, you have to have submitted all required documentation to the lender. Based on your financials, the lender will arrive at a maximum amount they can advance you for the purchase of the property. Your real estate agent can, therefore, use that pre-approval to go house hunting. Getting pre-qualified doesn’t carry this much weight- it only means you have engaged a lender and that you’re ready to begin the application process.
4. The interest rate quoted is what you’ll close with
The rate quoted is subject to change unless you lock it in. Interest rates fluctuate daily, changing severally even on the same day depending on how mortgage bonds trade. From the time you get the initial quote when beginning the pre-approval process to the time you settle on a property and want to close, the rate could have changed by a few points. You can only lock the rate once you've identified a home to which you want to commit.
Ask your mortgage officer all the questions you can think of before you close your deal.
Believe it or not, buying a condo can be a quick, easy process, particularly for those who understand their homebuying needs.
Ultimately, there are several factors to consider before you purchase a condo, including:
1. Your Budget
How much can you afford to spend on a condo? You should evaluate your homebuying budget closely to ensure you can cover all of the costs associated with condo living.
Getting pre-approved for a mortgage usually is ideal. With a mortgage in hand, you can browse a wide range of condos and find one that matches your budget perfectly.
Furthermore, don't forget to account for homeowners' association (HOA) fees before you buy a condo. HOA fees will vary depending on the condo community, and you should learn about them in advance so you can budget accordingly.
2. Property Size and Location
How much space do you need to accommodate your family? Consider the short- and long-term ramifications of a condo purchase, and you should have no trouble finding a condo that is the right size for you.
If you're uncertain about how big of a condo that you'll need, don't hesitate to consult with a real estate agent. This housing market expert will learn about your homebuying needs and help you narrow your search for the ideal condo.
Also, be sure to consider the location of a condo. If you want to find a place to live near school or work, you should search for condos that will help you cut down on your commute time.
3. Condo Rules and Regulations
Condo living is different from living in a traditional house. In a condo community, you'll have your own property, but there may be numerous condo rules and regulations in place that you'll need to follow at all times.
For example, many condo owners cannot modify a property's exterior without first getting approval from an HOA board. This means if you want to paint your condo bright pink or upgrade the property's windows, you'll need to ask the HOA board for permission.
Examine a condo community's rules and regulations prior to purchasing a condo. This will enable you to review the HOA board's mandates and determine whether you would feel comfortable following these rules and regulations.
When it comes to finding a condo, there is no need to look for a property on your own. Conversely, if you work with a real estate agent, you can take the guesswork out of searching for a top-notch condo.
Finding a real estate agent with condo experience is essential. This real estate professional will set up condo showings, keep you informed about new condos as they become available and negotiate with property sellers on your behalf. That way, this real estate agent will make it easy for you to acquire a first-rate condo at a budget-friendly price.
Kick off your search for the perfect condo today, and you can move closer to securing a condo that will serve you well for an extended period of time.
A homebuying negotiation may cause your stress levels to rise. However, as you work toward purchasing your dream house, there is no need to worry. In fact, there are many ways that you can limit stress as you finalize a home purchase, including:
1. Discuss Your Homebuying Concerns with Family Members and Friends
Family members and friends offer plenty of support. Thus, these loved ones are happy to listen to you and help you in any way possible, no matter what happens during a homebuying negotiation.
Don't be afraid to ask family members and friends for homebuying advice, either. These loved ones may be able to share their past homebuying negotiation experiences with you. And by doing so, your family members and friends could provide you with valuable insights that may help you move one step closer to acquiring your ideal residence.
2. Consider the Big Picture
Buying a home likely will be one of the biggest transactions that you'll complete in your lifetime. At the same time, it is important to note that there are plenty of fish in the sea. Therefore, you should try to remember that even if a home purchase agreement falls through, dozens of high-quality houses are still available in cities and towns nationwide.
Sometimes, it helps to take a step back during a homebuying negotiation. If you can inhale and try to relax, you may be better equipped than ever before to stay calm, cool and collected during a negotiation. With a fresh perspective, you could boost the likelihood of coming to terms with a seller and finalizing a home purchase agreement.
3. Consult with a Real Estate Agent
When it comes to purchasing a house, there is no need to embark on the homebuying journey alone. Fortunately, if you hire a real estate agent, you can receive expert support as you navigate the homebuying journey.
A real estate agent understands the stress associated with purchasing a house and will do everything possible to help you alleviate your homebuying worries. He or she can explain the homebuying process and respond to any concerns or questions. Plus, a real estate agent can negotiate with a seller's agent on your behalf to help you get the best price on your dream residence.
Furthermore, a real estate agent provides support after a seller accepts your offer to purchase a residence. A real estate agent will help you set up a home inspection, conduct this inspection with you and ensure you can complete a full review of the inspection results. In addition, a real estate agent can help you prepare for a home closing and ensure you can finalize a home purchase as quickly as possible.
There is no need to let stress get the best of you during a homebuying negotiation. By using the aforementioned tips, you can keep your stress levels in check as you negotiate a home purchase and accelerate the process of purchasing your dream home.