Are you a first time homebuyers? Have you wondered what it takes to really enjoy the home buying process? Let’s find out.
Even if you have bought or sold real estate in the past, many of the things that are the most stressful parts of a real estate purchase can be easily dismissed if you have the conversations you need to have…with the right people…and as early in the process as possible!
1. Property Taxes and Mortgage Insurance –
Many first time homebuyers are well prepared for what they know…and equally unprepared for what they don’t know!
Knowing how much house you can afford is largely dependent on how large a mortgage (basically, a home loan) you can handle. Bare in mind, most loan programs come with some added costs that some first time homebuyers don’t always take into consideration. 2 costs that tend to sneak up on a first time homebuyer is mortgage insurance and property taxes.
Mortgage Insurance* – This is typically required when down payments are below 20%. Rates can range from 0.32% to 1.20% of the principal of the loan per year based upon loan factors such as the percent of the loan insured, loan-to-value (LTV), fixed or variable, and credit score.
Property Taxes – To ease the burden of writing 2 big fat checks each year for property taxes, some first time homebuyers will wrap this cost into their overall monthly payment by paying a portion of their yearly property tax bill with their mortgage. This can be set up through escrow and, depending on how much your property taxes are, can add a few hundred extra dollars to your monthly payment.
Start your research by using a simple mortgage calculator to see whether you can afford to pay the monthly mortgage on the kinds of houses you have in mind as well as these 2 extras I just mentioned. I’ve inserted a simple mortgage calculator so you can get an idea how they work
Just remember, owning a home involves more than a monthly mortgage. Knowing this early and planning for it can certainly make for a smoother transaction!
What are some other costs first time homebuyers need to know?
Don’t forget the standard day-to-day expenses you’ll also incur once you own that home.
- Homeowner or condo association dues
- General Maintenance
Apply the old rule – You don’t want to be house rich but pocket poor!
2. Inspection & Appraisal –
The cost first time homebuyers need to make to insure their largest investment is sound!
Most first time homebuyers know about the inspection and appraisal as a necessary part of the home buying process. What is not usually known is how much it costs.
In most instances, a first time homebuyer has to rely on friends, family or their real estate broker to help them find a qualified and knowledgable home inspector. Most home inspector will cost anywhere from a couple hundred dollars and up! However, if there is a need to have any additional inspections based on findings that are outside the scope of their home inspector, all of the sudden, the money starts jumping out of their pocket!
Some additional inspections that a first time homebuyer should be aware of:
- Sewer and water main inspections – This service can be performed by a licensed plumber and may include a camera being sent down the sewer line to see if there are any blocking issues such as roots or cracks in the pipe.
- Septic System Inspection – In most cases where the home is serviced by a septic system, the lender will require this as a condition of the loan however, no first time homebuyer wants this to be an issue after they take possession so it’s money well spent!
- Well Water Inspection – Same as with the septic system…most lenders will make this a condition of the loan but you likely will incur the cost.
3. Home Inspections are not PASS or FAIL –
This is when the first time homebuyer gets to flex their negotiation muscle!
On an occasion, I will work with a first time homebuyer who is under the impression their home inspector is there to ‘check off’ on the house! I quickly help them understand that the inspection of the home is as much a vehicle to get any items fixed found during the inspection as it can be a negotiation tool to get a new price or even a potential sum of money to address any needed repairs that the seller can’t or won’t remedy. This is known as a ‘Hold Back’ and can be negotiated as part of the purchase and sale agreement.
An Educated First Time Homebuyer is a Smart First Time Homebuyer!
In every opportunity where I have helped educate and empower my first time homebuyer before we ever start looking at house, I almost always finding the home buying process less stressful, more positive and head and shoulders better…for all parties involved!
I am passionate about Real Estate and eager to answer all of your real estate questions! Text or Call me at 360-880-2356 or email me directly to ask about Buying, Selling or Investing in today's Real Estate Market - serving Lewis County & Thurston County, WA.
Certified Residential Specialist | Real
Mountain Valley Real Estate