In the first part of this blog series, First-Time Homebuyers: Get Yourself Ready, we walked you through the decision of whether you’re ready to buy a new home right now or not. In part two, we’ll discuss the real costs of buying home and how to build the best home-buying team.
Know the Real Cost
When budgeting for a new home, look at all the expenses associated with it. Just as you’d add up gas, oil, insurance, mechanics’ fees, and car washes when buying a new automobile, you need to look beyond the price of a house when buying a new home.
Don’t stop with principal and interest; add in utilities, the cost of commuting, and future upgrades. Call the utility companies that services the house you are considering and ask for an estimate of what the cost will be, whether there are any budget plans available, etc. Will the gas budget for your car go up if you are moving farther away from the places you frequently visit?
Add 3% to 6% more for closing costs, which will vary based on where you live and what taxes your state and city require you to pay. And if you’ll be joining a home-owners association (HOA), ask to see the contract. You’ll want to know about all rules and restrictions, from pet ownership to who can use the pool. Fees can be as low as $0 or as high as several hundred dollars per month, depending on the amenities and services offered. That could easily turn an $800 mortgage payment into an $1,100 one.
Research Your Mortgage Options
The lending pros at your credit union can help you investigate all your mortgage options and pick the one that’s right for your situation. Think about your long-term plan when you’re exploring these. You might be one of those people who never plans to buy another home, so maybe you’re more interested in a 30-year, fixed-rate mortgage. Another couple might look at this home as a starter property that they only want to own until their second child is born. Thus, they might want an adjustable-rate mortgage.
Pick Your Team
In addition to your credit union loan adviser, you’ll need people with the right stuff all along the way.
- Real Estate Agent
- Your real estate agent is your insider to the world of homebuying, and the right one can be an invaluable asset when buying your home.
- Home Inspector
- A knowledgeable home inspector is just as important as a great real estate agent. Getting a home inspection can save you thousands of dollars in the long run, but it must be thorough.