Ownership Costs

Have a firm idea of what you can afford.

Whether you’re a first time homebuyer or getting into your second home, when you begin your home buying process, you need a firm idea of what you can afford and where your price point should be.

Consider the following factors when planning your home purchase:

                   Mortgage Costs

Most buyers require a mortgage. Work with your lender to pinpoint your monthly payment, the costs of your mortgage and the difference in offers. Your mortgage costs can vary significantly depending on your loan type and interest rate. Today’s most common loans include:

  • Fixed Rate – These are conventional loans with fixed, stable interest rates for the life of the loan, usually about 30 and 15 years.
  • Adjustable Rate – Adjustable Rate Mortgages (ARMs) start with a low rate for a specific period, then fluctuate based on the market conditions. ARMs are better suited for borrowers who want to stay in their homes for shorter periods, such as eight years or less.
  • FHA – The Federal Housing Authority (FHA) secures the loan, which is generated by a mortgage lender. FHA loans are helpful for many first time homebuyers as only a 3.5% down payment is required. Borrowers must pay mortgage insurance for their FHA loans, which generally carry attractive mortgage rates and less stringent guidelines.
  • VA – If you are a Veteran that qualifies for a VA Loan, you are eligible for a zero down mortgage. Borrowers must pay closing cost which can also be rolled into the loan.

Insurance

  • Homeowner’s Insurance – You also need to insure the value of the home against fire, theft, flood and more. Shop around for the best price and remember this cost can go up each year, especially if you file a claim.
  • Private Mortgage Insurance (PMI) – If you put down less than 20% on a mortgage, you’ll need to pay PMI. This Insurance protects your lender against a potential default on the loan. PMI generally runs up to 0.75% of the loan amount, depending on your loan to value and credit score.

 

Property Taxes

Property taxes can significantly raise your monthly outlay and may slowly increase depending on a variety of local factors. Typically, a home is taxed on the assessed value, which is an amount equal to a fraction of its appraised value

          Utilities

Utility expenses are a given, especially water, gas and electricity – and don’t forget your cable and internet bills.  Have your Foxfire agent ask the home seller for their average monthly cost over the last year to help you estimate how much to put aside monthly.

          Upkeep and Upgrades

Don’t forget to reserve time and money for upkeep inside and outside your home, from landscaping to flooring to appliances. You must hire a gardener to mow, weed and care for beautiful flowers and shrubs, unless you have a green thumb and the desire for time for maintenance. Ask your Foxfire agent for referrals and compare costs.

Once you tally these costs, you may need to adjust your price range.  This will make for a smooth financially comfortable transition into your new home. Your Foxfire agent will help you each step of the way.

Foxfire Realty, Inc.
Foxfire Realty, Inc.
(352) 732-5605