By: Joshua Carlson
Purchasing a home can become costly, so it’s crucial to know what the costs are before plunging in head first and not being aware of the complete picture. There are 4 pieces to this financial puzzle.
1) First Piece of the Puzzle – When you find a home that you feel is the right fit for you; your Realtor will suggest to make an offer on the property, by writing a Sales Contract, extending your terms and details of how you are going to pay for the purchase of the property and many other factors that weigh into the successful negotiation between the two parties (Seller & Buyer). One of the most important factors that will be weighed by the Seller and Sellers Realtor, is how much of a Deposit are you are placing into Escrow (Earnest Money). This deposit shows how serious and ready you are to commit to this deal. Talk with your Realtor on what they suggest for your deposit.
2) Second Piece of the Puzzle – Make sure that you can afford your Monthly Mortgage Payment, the Principal & Interest Payment, home insurance and Taxes, and HOA or Condo Association fee (if applicable). Talk with your Mortgage Broker as to your comfort levels. It’s one thing to qualify and be “approved” for a home, and another to be feeling good with the payment you have to make per month for the home. How much can you afford? That’s a question to be answered by the Mortgage Broker; however, there is a standard rule of thumb in the industry, which says you can afford two and one-half times your annual gross income. Your annual gross income is the amount you make before taxes are deducted. This number can include your spouse or other co-borrowers income. For example, if you and a co-borrower have a combined annual gross income of $50,000 you could afford to pay up to $125,000 for a home ($50,000 times 2.5 = $125,000).
3) Third Piece of the Puzzle – Closing Costs and Costs related to the Purchase of your Home. Please check with your Mortgage Broker and Title Company/Real Estate Attorney to make sure you are prepared for the exact amount you will need to take to the table on the closing day. Remember, there are fees such as Title Insurance, Documentary Stamp Tax on the deed and on the mortgage, intangible tax on the note, Lender fees, recording fees, appraisal, and survey etc.
4) Fourth Piece of the Puzzle – New Homeowners tend to forget the maintenance costs that could be incurred in the upcoming months or years with their home, so it’s important to have a “house fund” for repairs, or sudden costs that may make come up. These are things such as pool or yard maintenance, air-conditioning repairs/maintenance, etc. Search the pool maintenance near me to know the cost before moving in.
As the pieces of the puzzle fall in place, you will find that you are prepared and organized for this new adventure………Good Luck!