Paying a mortgage is more gratifying than paying rent, because a mortgage leads to ownership, while renting leads to more renting. Search Realty advises first time home buyers to understand all the costs involved in buying and owning a home as only then can the home buyer determine if they are ready to step into the real estate market and buy a home.
Most potential home buyers forget to factor in various costs when assessing affordability of a home. Factors such as down payment, insurance, as well as costs associated with moving, purchasing major appliances, and more, all seem to go missed when most potential home buyers are looking at the cost to purchase a home.
Here are five factors that a potential home buyer should assess in order to determine if buying a home is an affordable option.
1. The potential home buyer needs to get an estimate for closing costs. These closing costs include points (the dollar amount paid to a lender for obtaining a lower interest rate on a loan), taxes, recording, inspections, prepaid loan interest, title insurance and financing costs from a mortgage lender or a real estate professional.
2. Adding the down payment requirements and the closing costs together will determine an approximate amount of money that the potential home buyer will need right from the start.
3. The potential home buyer needs to think about moving costs as well. They will need to hire a moving company or rent a truck. Regardless of how it is done, it will cost money. One key to remember is that the more the potential home buyer has, the more costly the move will be.
4. Property taxes. Many lenders require an impound account in which monthly payments for property tax (and often insurance) are paid together with the monthly mortgage payment.
5. Finally, the potential home buyer should determine a budget for maintenance and repairs.
Once the numbers are determined, the potential home buyer may find that they are a bit short, and at that point, Search Realty advises that they investigate ways to reduce costs. Here, Search Realty is always available to help, whether it’s determining how to reduce costs, or even looking for a different home that meets the budget of the potential home buyer.