Closing Costs for Home Buying: Charges Incurred When Buying a Home
Many first time home buyers are under the misconception that once they pay the asking price on the property they can move in. In fact, there are many additional closing costs that you have to pay out of pocket. Note that last part – you have to pay out of pocket, so you as you prepare to buy a home you should have this money ready. What are these costs and what can you expect to pay? Here are some of the common ones. Make sure to discuss them with your real estate agent and your lender so that you can know which ones apply to you – it will help with proper budgeting.
Pre-paid homeowners insurance – homeowners insurance is one of the most important investments you will ever make in your new home. In case there is damage to your property your insurance company will reimburse the full cost of the repairs. The amount you will pay will depend on the value of the property that you buy – the higher the value the higher the homeowner insurance premiums.
Cost of appraisal – it is never a good idea to buy a property that you haven’t had appraised. The previous owner may try to convince you that they have already done an appraisal, but you shouldn’t take them at their word. You need to bring in your own professional to do an independent appraisal and give you a valuation as well as a report on the state of the property.
Charges by the mortgage company for implementing the mortgage – getting the mortgage is one thing, but did you know that there are fees associated with the actual process? Think about it this way – there are people who have to be paid to handle your mortgage every step of the way and that cost falls on you. The amount you pay will vary depending on the size of your mortgage.
Prepaid interest or points – we all want to get mortgages at lower interest rates and you can make this happen if you pay a prepaid interest. This usually works out to about 1% of the total value of the mortgage and it could result in higher monthly payments, but remember that you will pay less in the long term because you pay lower interest rates.
Attorney fees – even when you have a great real estate agent it is a god idea to have an attorney come in and look at your contract – remember your real estate agent is looking to make money out of the deal and they may do so at your expense if you are not careful. You should pay an attorney and have him look through all documentation and help you through the closing process.
Recording fees – this may not be necessary depending on where you live, but there some states that require you to pay for the processing and holding of information relating to the purchase of your property.
These are just some of the fees that you can expect to pay as a part of closing costs. Ask your real estate agent to provide you with a list of everything required in your stat
Are You a First Time Home Buyer? Tips for Choosing a Realtor
The time has come for you to buy your first home and you know that one of the things that you have to do is find a realtor to help you through the process. In fact, it is one of the most important things that you can do – having a realtor working with you in the early stages of your real estate transaction can save you a lot of heartache down the road. So what should you be looking for?
The first thing you need to do is distinguish between a real estate agent and a realtor. A real estate agent is required to qualify by taking certain exams as is a realtor, but realtors are held to a higher code of ethics because they have to be members of the National Association of Realtors. This association requires them to do so much more than just help people buy and sell property. They must, for example, pledge to hold the interests of their clients before their own. This means that if they come across a deal that may make them money but that would cost their client it is their duty not to pursue that deal and to be honest to their client about it. Realtors cannot also exaggerate, misrepresent or conceal material facts, something which real estate agents can do. Before you engage someone to help you with the purchase of your first property it is important to confirm that they are a realtor.
What previous clients have to say also matters a big deal. The best realtors are those who work locally – they find a city or town and focus on helping with property deals in that particular area. They are familiar with the properties within this zone that are for sale and those who are looking to buy. You will find that they also have a client pool in this area. It is your job to find a few of their former clients so as to know what kin d of reputation the realtor has. Talk to three or four about what it was like to deal with the realtor and whether they would recommend them to someone else. You should also look online to see whether they have any negative testimonials.
You may find some realtors or real estate agents who describe themselves as part-time. Don’t hire one of these. It means that they help people buy and sell property during their free time, which means that they are not completely up to date with the property market around them. The best realtors are those who are on the job full time and who know everything about the properties in their community as well as the property market.
Make sure that you get an airtight contract with your realtor. Look into how much they are charging you as well as what they are prepared to do for you – ideally they should take you through the process from beginning to end. It is also their duty to warn you of any pitfalls that you may encounter.
Home Ownership: Should You Buy Or Rent Your First Home?
Young people today are grappling with the question of whether they should buy or rent a home to start a family. For their parents it was a no-brainer – they got a job, saved a bit of money while they lived in a rental but as soon as they could they put down some money and took out a mortgage. Today it is not so easy. For one thing, incomes are lower than they were in the past – young people are making less today than their parents were making at their age. For another, young people are in a lot more debt today – the average college graduate owes tens of thousands in student loans. So, as someone who is looking to start a family, should you buy or should you rent?
Home ownership comes down to one thing – whether or not you can afford it. How much you make, your monthly expenses and how stable your job is all determine whether or not it is a god idea to buy a home today. This, however, is a short term view. If you think about it in the long term it is much better to buy a home than to rent. Simple logic can explain this. Imagine that you rent an apartment that costs you $800 a month in rent. In one year, you will have paid the landlord more than $10,000 in rent. Imagine if you were using this money to pay for a mortgage. In a few years, you would probably be all paid up and you would have an asset that you can truly call your home.
For many the issue of finding a lender is what leads to the decision to rent. Finding a renter is easy so long as you are disciplined about your spending. Remember the only thing that a lender wants to see is your ability to pay them back. So long as you are employed and you are not in debt you should have no problem finding yourself a mortgage. The thing to be careful about is debt. Many young people have no idea how the debt they are taking on will affect them when it comes time to make the tough decisions. Every time you are tempted to take on debt remember that it will only work against you if you are not able to pay it back. There really is no reason why you should own several credit cards when you can make do with just one, or drive a flashy car when you can drive something cheaper. There is no reason to eat out every night of the week when you can save money by preparing meals at home. It is the small decisions like these that eventually help you get a mortgage when the time comes.
There is another benefit to owning your own home. You can borrow against it once you have paid off some of your mortgage, which can help you get other projects underway. You can, for example, plan things in such a way that by the time you pay off a certain amount of your mortgage you can borrow against it and start a business.