April 28, 2017
Are you buying a home
in the near future? Have you started visiting real estate websites looking at
different properties in various parts of town? Maybe even calculated an
estimated monthly payment? Then congratulations, you’re soon on your way to
becoming a home owner. Yet you’re already aware there are costs involved when
buying a home while there are little to none when renting. In order to help
better prepare you for your financial journey, here are some costs associated
with buying a home you need to know about.
Down Payment. This
isn’t a cost so much as it is a transfer of assets, but you’ll still find your
bank account lightened. Most loans require a down payment of some sort so
you’ll need to count those funds needed to close. There are loans that do not
require a down payment, VA and USDA loans, but you will still need cash to
Closing Costs. Closing
costs are charges associated with obtaining a mortgage loan. There are hard
costs and so-called “soft” costs. Hard costs are fees for services needed by
your mortgage company in order to approve and fund your home loan. An
underwriting fee and an origination fee are such charges. So are escrow and
title insurance fees. Soft costs are those for property tax impounds, insurance
and interest charges.
are amounts collected in order to pay for property taxes and insurance when
due. Each month your lender can collect a monthly amount that is distributed
when the property tax bill comes and insurance policy is due to renew. At
closing, some lenders require you to set up an impound account equal to one or
two months’ worth of taxes and insurance to be used as a “cushion” should taxes
or premiums rise during the course of the loan. Impound accounts are typically
required if your loan down payment is less than 20% of the sales price.
Taxes and Insurance. If
you elect not to have impound accounts you will be expected to pay property
taxes twice per year and renew your insurance policy annually when it is time
for the premium to renew.
you rent and something needs fixing in your apartment you call the apartment
manager or landlord. Say the sink disposal is locked up and the sink doesn’t
drain. You’ll just place a call and the repair person shows up. When you own
and something needs fixing it’s you who has to take care of it. If you can
replace a sink disposal on your own you saved some money paying a plumber.
Otherwise, plan on taking care of maintenance and repairs out of your own
HOA Dues. If you
live in a condo or in a neighborhood where there is a homeowner’s association
fee, this is an additional cost paid annually or monthly, depending upon the
requirement. The HOA fee is used to take care of common areas such as
sidewalks, community center or swimming pools.
For more information or questions about mortgage loans, please call (855) 757-8748.