You would admit that you have home-buying fever. You find yourself scanning online searches for homes in your area, imagining yourself and the family laughing while devouring BBQ in the backyard. While dreaming of your first home, there are several things to consider…not to rain on your parade but rather give you the smarts you need as you begin the process.
Your Realtor will first ask you to get a pre-approval letter from a mortgage company so you know the amount of loan you qualify for. I’m sure you have crunched numbers by using the handy mortgage calculator found on most real estate websites but there are more costs to buying a home to consider.
- Appraisal – You pay $400-$500 for an appraiser to evaluate the home and determine the home’s value.
- Inspection – You pay $300-$500 for an inspector to determine if the home has any structural, mechanical, pests, or other potential issues.
- Property Taxes – Don’t forget to consider property taxes when you determine your monthly costs. Your Realtor will help you in identifying the property taxes in the areas you are considering to purchase a home.
- Utility Costs – You will need to consider the cost of setting up electricity, water, gas, and telephone services as well as the reoccurring monthly costs.
- Homeowner’s Insurance – A requirement to obtain a mortgage which covers both the property and its contents. You may need additional insurance to cover natural disasters such as floods.
- Title Insurance – Required by the lender to guarantee the borrower clear ownership of a property. Title Insurance cost varies based on the value of the property.
- PMI (Private Mortgage Insurance) – You pay for PMI if your down payment is less than 20% of the sales price. This insurance protects your lender if you default on the loan. The fees of PMI vary.
Don’t be discouraged as you forge ahead on the journey of purchasing a home. Your Realtor is there to help you through this journey and to guide you along the way. It is important to ask your Realtor about the cost of all of these things for the area you are moving to. Be a well-informed first time home-buyer.
Anthony Coleman, Realtor, Top Guns Real Estate