Many first-time home buyers have the impression that they need money for a down payment and perhaps a few other minor expenses. However, a home purchase comes with a number of costs. Some of these can be rolled into a home loan, while others will be out of pocket. When you and your partner and ready to buy a home together, you’ll need to be prepared to open your wallet more than once.
With the recent FICO credit score modeling change, and, the introduction of a new credit scoring system for the some 53 million that don’t have any types of credit, and interest rates being at near historic lows, now is the time to buy a home. When you do, you lock-in your monthly housing payment and begin to build equity. In addition, your home will increase in value and because we’re in one of the fasting growing areas in the country, Orlando, the value will increase at a more rapid rate.
Getting Ready for a Home Purchase with Your Partner
Understand that you’ll need to do some things like purchase life insurance and other insurance policies and be sure to speak with your buyer’s agent about how to arrange the title to your joint property. In addition, as your buyer’s agent will tell you, pick a neighborhood before you choose a home because that’s what you’re really buying–a part of a neighborhood. It’s also a good idea to inquire about any future plans as to the neighborhood and surrounding area. Because Orlando grows year after year and new developments are common, these can have an impact on the value of your property.
“Not all of the costs associated with homeownership are reflected in the listed price. Indeed, many buyers—particularly first-time buyers—may be surprised by the amount of cash they’ll need to set aside for housing-related expenses that they hadn’t previously considered. These often-overlooked expenses can include everything from title insurance to lawn mowing.” –U.S. News and World Report
Some other things you ought to address is the timing. If you find a home that you and your partner love, and, the seller is on a tight timeline, you might have to move–literally–in a faster fashion. By contrast, if you and your partner are under a deadline, that too, will have to be taken into consideration.
Costs are Associated with a Home Purchase
When you are pre-approved for a home loan, you and your partner can begin your house hunt. Once you find the right property, you’ll have the following expenses, so, be ready and have extra cash set aside for these:
- Inspections. Those these are generally optional, these are very good to have to be in-the-know. Schedule a pest inspection, home inspection, and wind mitigation inspection. These will tell you a lot about the property and you’ll know if there are defects or problems.
- Homeowners insurance. When you buy a home, the mortgage lender will require you take out a homeowners insurance policy–this is to protect the lender and you. Shop around for policies and ask plenty of questions so you know precisely what you’re getting.
- Appraisal. You might have to pay for this out-of-pocket or roll it into your closing costs. An appraisal is also a lender requirement because banks do not loan more money than a property is worth. It will also tell if if the home is priced right, low, or high.
- Down payment. The down payment is typically due at closing and can be three percent to five percent of the purchase price. Of course, the more you and your partner are able to put down, the better of an interest rate you’ll get and the less your monthly payment will be.
- Earnest money deposit. When a seller accepts your purchase offer, you’ll be expected to make a good faith or earnest money deposit. This money will be credited back to you at closing, usually going to the settlement costs.
Another in the long list is your moving expenses. To reduce this cost, you can sell off stuff you no longer need and/or use, give things to charity, and maybe even opt to buy new furniture.