What is the minimum credit score required to buy a house? It all depends on…
Buying a house is one of the biggest events of your life. Most people only buy several homes in their lifetime and each time is an ordeal.
As you get ready to buy a home, here are a few things to keep in mind.
Home Buying Tip #1: Account for All Costs
A lot of homebuyers will start the process with some kind of calculator to help them estimate how much money to spend. They’ll just plug in their expected mortgage rate, down payment and remaining mortgage to see how much they’d pay each month.
That’s a good way to start, but it’s not the entire picture. Here are a few other regular costs the homeowner needs to account for in their budget.
Taxes – Property taxes are often close to 1% per year of a home’s value. Doesn’t sound like much? Well that means a $400,000 home would have property taxes of about $4,000 a year, or over $300 per month.
Insurance – Home insurance isn’t something to sneeze at either. If your premium comes out to about $1,000 a year, that’s another $83 coming out of your pocket each month.
Homeowners Association (HOA) – Some people won’t be a part of an HOA when they buy their home. But many neighborhoods do have an HOA, and they can cost a pretty penny. Depending on where you live, it can cost anywhere from $100 a year to $6,000 or more.
Of course paying these types of fees have benefits attached. Maybe you don’t have to do any lawn maintenance yourself and there’s an amazing pool and clubhouse. But that’s still money out of your pocket.
Home Buyer Tip #2: Save Money for Maintenance and Updates
It may be tempting to put down every penny you’ve saved for the down payment. After all, the more you can put down now, the lower your monthly payment will be.
But we don’t recommend you do that. Keep some money aside, preferably in a very liquid account. There are a few reasons why.
Updates – you may really love the new house, but realize after a few days or weeks of living there that you want some changes. Maybe the bathrooms are too dark and need lighter-colored paint. Perhaps you thought the retro lighting in the office looked cool, but then you change your mind. Whatever it is, you’ll be glad you kept money aside to update these things.
Maintenance – Sometimes you move into a home and things break shortly after. Could be the gutters aren’t working correctly, so you need to get them fixed. Maybe the air conditioner for upstairs breaks and it’s the hottest time of the summer.
Having money aside for a rainy day is always a good thing!
Tip for Home Buyers #3: Research the Area
The last thing we recommend is that you research the area you’re moving to. Here are a few things to consider.
Drive around at night – things are always a bit different at night. Are street lights out? Are lots of people roaming the neighborhood? Do a lot of neighbors have cars parked in the street?
Check the schools – you’re likely to see lower property values and have a harder time selling a home in an area with bad schools.
Look for growth – are new stores, neighborhoods, etc. getting built in the area? Or does everything look old and run down?
Buying a home is tough – let us help. Give us a call and we’ll do everything we can to help you get into the home of your dreams.