A home is by far one of the biggest investments that most people will make in their lifetime, so you must do everything in your power to properly plan for this commitment. To do so, you need to ask yourself some key questions as you progress toward the big decision. Below are some of those financial questions to keep in mind before you jump into the home-buying process as provided by the mortgage professionals at Rex Homes.
What is My Total Budget?
You must establish a budget in consideration of your gross monthly income and current debt. Generally, your housing should never exceed 25% of your gross monthly income. This includes not only your interest and principal payments on your mortgage loan, but taxes, potential Homeowner’s Association (HOA) fees, and insurance as well. You should also budget an extra 1% of the home asking price for maintenance, utilities, and related payments.
Should I Buy an Old or New Home?
Given the popularity of house-flipping TV shows, the trend of buying old homes is on the rise, but not without drawbacks. Though the old home may have a lower asking price than a newly-built one, you must realize that it may come with numerous surprise costs. This is especially true of homes that were built before current building codes – they may have outdated plumbing or other structural components that will undoubtedly need to be replaced or repaired before you move in. Such costs can add up quickly.
How Much Are the Closing Costs?
This is where many first-time home-buyers get tripped up. You must remember that the down payment is not the only money you’ll need to save up for the big purchase. Along with this massive payment, you’ll have to pay for loan origination fees, title research, appraisal, the processing of paperwork, and a long list of administrative work. Normally, you can expect to spend an additional 2%-5% of the home’s asking price during closing.
What Repairs or Renovations Are Needed?
Firstly, know the difference between repairs and renovations, as the difference directly affects the expenses you’ll be paying and any permits you need to acquire. Poor construction of plumbing, electrical systems, and the home’s structure can wind up costing thousands of extra dollars in repair costs. On the other hand, broken windows could be considered a renovation. Have these details in line before you commit to buying a home.
What is Included in the Sale?
Knowing what is included in your home purchase will help you to budget for any additional expenses, such as furnishing. Generally, you can expect that anything that is permanently attached to the home – fixtures like faucets and cabinetry – will be included in the asking price. Log the items that you would like to see included in the home upon viewing and ask the seller for a written document on what items will remain.
With the help of a mortgage professional, you can acquire all this key information and more. They’ll help you to keep your finances in line, ensuring that you are prepared to make the purchase when you’ve reached your final decision. Get in touch with a mortgage professional today to progress in your home-buying journey.