Tag: homeownership

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Mortgage News Matters

Unveiling Hidden Costs: Understanding the Total Expense of Homeownership

Embarking on the journey of purchasing a new home is an exciting endeavor, but it’s crucial to comprehend that the total cost extends beyond the initial sale price. As savvy homebuyers, it’s essential to anticipate and plan for these often-overlooked expenses to ensure a seamless and stress-free home-buying experience. Let’s delve into the components that constitute the complete financial commitment of homeownership.

1. The Down Payment Dilemma

A cornerstone of homebuying, the down payment signifies your initial financial stake in the property. This upfront cash payment establishes your ownership and varies according to the mortgage type chosen. The required amount can differ significantly, necessitating thorough research into available mortgage options.

2. Navigating Closing Costs

Closing costs encompass a spectrum of expenses beyond the property’s purchase price, incurred during the finalization of a real estate transaction. These charges encompass application fees, origination or underwriting fees, title insurance, title search fees, and, in some instances, transfer taxes. Calculating these costs and including them in your budget ensures a comprehensive understanding of your financial commitment.

3. Insuring Your Investment

The realm of insurance further compounds the financial landscape of homeownership. Two pivotal types of insurance demand consideration:

Homeowner’s Insurance: This safeguard shields your investment against unforeseen damages caused by natural disasters, theft, or vandalism. Ensuring you’re adequately covered provides a safety net against the unexpected.

Private Mortgage Insurance (PMI): A requirement when the down payment is less than 20%, PMI safeguards lenders in case of borrower default. Understanding its implications and cost is paramount for informed decision-making.

4. Embracing H.O.A. Obligations

In communities managed by a Homeowner’s Association (H.O.A.), additional costs known as Homeowner’s Association fees apply. These fees underpin essential services and amenities such as security, landscaping, and recreation centers. Grasping the financial commitment tied to an H.O.A. enhances your ability to factor these costs into your budget.

5. Untangling Property Taxes

Property taxes, funding pivotal services like education, transportation, and community facilities, constitute another layer of the homeownership financial equation. These taxes vary based on geographical location and can increase alongside your home’s value. Acknowledging and preparing for this ongoing financial responsibility is integral to comprehensive financial planning.

6. Factoring in Move-In Expenses

Often underestimated, the expenses tied to moving into your new abode are critical considerations. Costs encompass hiring moving services or acquiring cleaning supplies to ensure your transition is smooth and hassle-free.

7. Building a Cushion for Maintenance, Repairs, and Utilities

Allocating funds for inevitable maintenance, repairs, and utilities is prudent. Establishing an emergency fund equivalent to around 1% of your home’s value bolsters your financial readiness to tackle unforeseen expenses, ensuring your investment remains well-maintained.

In conclusion, grasping the intricacies of homeownership’s financial landscape goes beyond the initial sale price. By embracing a comprehensive understanding of these often-overlooked costs, you empower yourself to make informed decisions and embark on your homebuying journey well-prepared.

Ready to dive into the world of homeownership with clarity and confidence? Contact us for expert guidance tailored to your unique circumstances.

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Mortgage News Matters

Costs to Consider When Purchasing a New Home

When purchasing a home, it is important to keep in mind that the total cost includes more than just the original sale price. Planning for these unexpected costs is the best way to ensure a seamless home-buying experience. So, what are they?

Down Payment

A down payment is the cash you pay upfront when purchasing a home. This is your contribution toward the purchase and represents your initial ownership stake in the home. The required amount will vary by mortgage type.

Closing Costs

Closing costs are expenses, above the property’s price that are incurred at the closing of a real estate transaction. These costs can include application fees, origination and/or underwriting fees, title insurance, title search fee, and in some cases a transfer tax.

Insurance

There are two types of insurance to consider when purchasing a new home:

Homeowner’s Insurance

This type of insurance protects you from unexpected damages to your home such as effects from a natural disaster, theft, or vandalism.

Private Mortgage Insurance

PMI provides protection for the lenders if the buyer defaults on their loan and is required when a homebuyer puts down less than 20% of their down payment. For FHA loans, insurance is required regardless of the amount of the down payment.

H.O.A.

Homeowner’s Association fees are applicable when buying a home or condo in a community that is run by a homeowner’s association. They are used for services and amenities like security, landscaping, and recreation centers.  

Property Taxes

Property taxes are used to fund services like education, transportation, and community parks. They vary by geographic location and can increase along with the value of your home.

Move-In Expenses

Often overlooked, moving expenses are necessary to any home-buying experience. Some of these include hiring a moving truck or purchasing cleaning supplies.

Maintenance, Repairs, Utilities

Having a fund available for things like maintenance, repairs, and your new utility bill is always a good idea when purchasing a new home. Some experts suggest saving 1% of the home’s value as an emergency maintenance fund when these almost certain expenses arise.

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Mortgage News Matters

Costs to Consider When Purchasing a Home.

Buying a home is likely to be the largest purchase you make in your lifetime. Along with the price tag, there are other costs to also consider. Costs will vary from buyer to buyer due to a few different factors including the type and length of the loan you receive, as well as location and demand. It is important to familiarize yourself with these financial obligations prior to beginning your home search. To help with understanding more about what comes along with the purchase of your home, here is a list of costs you will need to consider.

Down payment:

The down payment is a set price you pay upfront when you purchase a home. Through a conventional loan, a down payment is required and will be determined based on the property type and the price of the home. The amount you put down on a home will affect your interest payment as well. The larger the down payment, the lower your interest rate. However, some loans such as a VA loan or USDA don’t always require a down payment.

Closing Costs:

To finalize your mortgage loan and receive the keys to the property, you will have to submit all closing costs. These costs are each directly related to your mortgage and include the following.

  • Application fee
  • Appraisal fee
  • Credit check fee
  • Underwriting fee
  • Title insurance
  • Title search fee

Property Taxes:

Your property taxes are calculated by your local government where your property is located, and you are required to pay them as long as you own the home. These taxes are based on the value of your home or property and if over time the value is assessed to a higher value, your taxes will increase.

Homeowners and Mortgage Insurance:

Home insurance protects your property against the cost of potential damage from unforeseen circumstances. Homeowners insurance will vary as there are many options available, so it is best to shop around before deciding which one to go with. Mortgage insurance reduces the lender’s risk if you can’t make your mortgage payment.

HOA Fees:

If you are purchasing a home overseen by a homeowners association then you will be required to pay a monthly fee to the community. These fees are in place to keep shared spaces within the neighborhood maintained such as a gym, pool, or landscaping. They also protect other people’s property values by restricting a single homeowner from making a change to their home.

Maintenance Fees:

No matter where you choose to live, you will always have to keep up with regular maintenance and home repairs. Keeping extra funds on the side or setting up an emergency fund for replacing items will help you be better prepared when things break. Planning out a budget and knowing what costs to expect as you begin your home buying journey will eliminate any surprises that you may not have been prepared for.

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Mortgage News Matters

Pros and Cons of Holding an Open House

home for sale with open house sign out front

What is an Open House?

An open house is a scheduled time set for potential buyers to walk through a property that is for sale. Typically hosted by a broker, the owners or renters of the property are absent from the viewing and many potential buyers are welcome to tour the space.

How Does it Work?

Typically scheduled during weekends, brokers welcome potential buyers to leisurely view the property and ask questions, they would otherwise not have the opportunity to do so without a broker present. It is customary for brokers to provide drinks and small plates for those who attend, and many provide collateral that buyers can take with them and refer to with information on the home, such as square footage, number of rooms, and information on the surrounding neighborhood.

The goal of an open house is to secure interest from buyers by providing a rare opportunity to take their time looking at a property closely, before placing an offer.

Advantages of Holding an Open House:

  1. Provides an opportunity to attract potential buyers. When an open house is planned correctly and properly marketed, it can provide a great opportunity to attract potential buyers, and possibly even lead to an offer. Many realtors suggest sellers hold an open house the first weekend that the property goes on the market – to generate the most buzz.

    Open houses can also bring in potential clients who may not have even planned for such an event but happened to be driving by. It’s a great way to appeal to potential buyers in a more casual way and low-pressure scenario.

  2. Provides feedback to realtors from visitors. Another benefit of holding an open house is for the potential for realtors to gain real feedback from visitors – both positive and negative.

    Many realtors find that potential buyers often share their feedback out loud as they walk through the home. This can give realtors crucial insight into buyers’ perceptions and any issues that could keep the owners from making the sale.

  3. Can lead to an immediate offer. If done properly, and by generating enough buzz, an open house can sometimes lead to an immediate offer. When potential buyers are browsing a home with many others also looking to buy, they can get a good sense of their competition. If competition is high, this may encourage them to make an offer much quicker than they ordinarily would otherwise.

    This is beneficial to sellers and buyers alike, as it gives the buyers a realistic idea of how many others like them are also looking to buy in their desired neighborhood.

  4. Allows sellers to cast a wide net. Showing a home to multiple buyers, rather than one at a time only widens the reach of potential buyers for the seller. It is also much more efficient to spend the same amount of time showing a home to a group of people, rather than an individual.

    This, in addition to potential feedback from viewers and an understanding of competition in the market, are huge benefits to holding an open house.

So now that we’ve covered its advantages, what are some of the disadvantages to holding an open house?

Disadvantages of Holding an Open House:

  1. Requires much effort – sometimes more than it’s worth. Planning and executing an open house is not an easy task. In addition to coordinating a time that works best for the owners to be out of the house for an extended period, making accommodations for pets or children, and removing all personal items throughout the home, putting on an open house requires money and time spent on marketing to bring viewers in. And if no offer is made – it can feel like a huge waste.

    That’s why it is important to take the time to properly plan, market, and organize for your open house, if you decide to hold one.

  2. Compared to online listings, an open house requires more time to reach potential buyers. Nowadays, most homes for sale are listed online before they even schedule an open house. And most buyers go online and browse properties from the comfort of their own home.

    Buyers can find almost all the same information online as they would at an open house, like the condition of the home, its details, and even view photos of the property from every angle. This alone, can make open houses seem unnecessary and even antiquated.

  3. Owners are typically required to leave their home for a designated amount of time. Typically, when holding an open house, the homeowners are asked to leave their home and take with them any personalized photos or memorable that can be found throughout the home.

    This can be tedious and difficult to plan for with the daily bustle of normal life. Some would rather avoid having to deal with this added stress and simply list their home online.

  4. Can open the home up to potential theft. Though there are benefits to opening your home for sale to many individuals – with hopes that with increased awareness, comes increased offers – doing so can open you up to potential theft. Open houses can give opportunities for criminals to explore a property and plan a break-in.

    If you are considering hosting an open house, make sure to hide any valuables, or take with you anything that you would not want to get stolen or damaged.