About Me

Understanding Real Estate Issues About a year ago, I began thinking about unloading my existing property and getting a new house. Unfortunately, I wasn't really sure where to start, so I turned to a friend of mine who specialized in real estate. They walked me through the entire process of selling a house and investing in a new one, and I was really impressed with how much of a difference they made in my process. I began working hard to get things taken care of, and within a few months I was able to completely transform my finances with the sale of my home.




Budget Tips For First Time Homebuyers

If you're hoping to start shopping or your first home, handling the financial commitment is probably at the top of your list of priorities. However, some hidden costs, fees, and other challenges during the buying and moving process can sink your budget. 

To help prepare for the reality of the costs of buying, here are some budget tips that can help. 

1. Explore all loan types.

Many people qualify for conventional loans, and these can be great if your budget works within the confines of the loan. However, you can also try to get loans that may allow you to pay off your loan faster, or give you some wiggle room in the downpayment.

For example, some lenders offer a first-time homebuyer mortgage that requires a lower downpayment and a competitive interest rate. You can also apply for an FHA or USDA loan if you're short of liquid funds for a huge downpayment, especially in areas where real estate prices are high. 

You can also look for grants that give more money to first time buyers. For example, some counties may have a grant for several thousand toward your downpayment if you agree to live in the home for five years. These grants can save you much more in interest over the life of your loan because they give you more cash up front. 

Talk to a real estate agent about lenders in your area as well. Some local banks and credit unions can offer better deals than national mortgage companies. 

2. Be sure to account for up front costs.

Many buyers anticipate the costs of the downpayment, but buying a home also requires a little extra for:

  • Closing costs. Closing costs are most expensive for the buyer because of all the legal work, title work, and underwriting that needs be completed before you can sign for your mortgage. These can be steep -- plan for 2-5% of your purchase price. You can try to reduce closing costs by asking the seller to cover more of closing in your purchase agreement, but some sellers may not be willing, especially in a seller's market. 
  • Appliances. If appliances are not covered in your purchase agreement, the sellers may leave you without a fridge, stove, or dishwasher. You'll need to factor in these costs when moving. 
  • Inspections and appraisals. These may be charged separately from closing costs and they can take several hundred dollars out of your budget. 
  • Ready money. This is a "deposit" on your offer that you have to be prepared to pay when you make the offer. It goes toward your costs at closing, but you need to make sure you have the money immediately. This is sometimes a surprise for people who are counting on downpayment help or a 100% financing agreement. 

Many lenders wrap taxes and insurance into the mortgage payment, but you can still save money by making sure you shop around for insurance before choosing a policy. 

3. Ask for extras.

Finally, don't be afraid to ask for extras when you're making an offer. This is a great way to save your budget. For example, you might request a one year home warranty to cover unexpected damages in the home. A simple warranty covers things like the AC unit, the furnace, the water heater, and other simple systems. A broken furnace could bust your newly taxed budget after you move in, so having the extra coverage could save you (and you don't have to pay for it).

Other extras to include might be leaving things like light fixtures and window treatments or asking for certain pieces of furniture. For more information, visit websites like nolahomes.com.