I have many clients that have the misconception the
only costs to save up for is the 20% down payment but they do not take into
consideration many of the other costs that go into home ownership just in the
initial buying process along let alone the ongoing costs projected.
Reserves-for cash reserves, lenders will require up to
six months of mortgage payments including your principal, interest, taxes and
insurance.
Closing costs, pre-paid taxes/insurance- closing costs include title fees,
inspection, escrow, credit report, appraisal fees all add up to anywhere from
2-5% of your purchase price. If you are buying a house for $400,000 then you
would be looking at anywhere from $4,000-$8,000 in costs. Good news is you can
always take a slightly higher interest to get a lender credit applied towards
your closing costs. Government programs such as VA and FHA may allow the seller
to pick up anywhere from 4-6% closing
costs for you. Always ask and have your realtor negotiate this.
Maintenance, relocation, homeowner’s association (if
applicable)-as a homeowner, anything that breaks now become a cost out of
pocket. Many of which are not things you can push out. I see most client within
the first six months of buying a house typically will rack up debts on their
credit card if not planning ahead.
Avoid being house poor-the takeaway from this is to be prepared, seek guidance and stay conservative with your purchase price. If a lender approves you up to $400,000 it
would be wise to stash away additional savings for any repairs and maintenance
costs you have around the house.
Comments
Post a Comment