Understanding the True Cost of Becoming a Homeowner (and Tips on How to Keep the Costs in Check)
Homeowner Tips and Tricks
Homeowner Tips and Tricks
A friend of mine who is also a professional realtor once told me that most of her clients made the decision to purchase a property with their heart, not their brain. Buying a new property can be a very emotional moment indeed, especially when you have worked so hard to be able to afford one. She also said that jumping to the decision for emotional reasons is one of the main causes of financial struggles for homeowners.
It is not a secret that there are costs to consider when you’re in the process of buying a new property. While not all of these costs are apparent and easy to understand, they can be very manageable when you approach them carefully. In this article, we are going to forget about your gorgeous interior design ideas for a second and dive into the true cost of becoming a homeowner.
Before you can actually own the property, there are several costs to take care of first. For starters, you need to cover an appraisal fee to have a thorough appraisal done on the property. This process will determine the market price or value of the property for several purposes. When you want to finance the purchase using a mortgage loan, an appraisal is mandatory most of the time.
It is also a good idea to have a thorough inspection done on the property. Inspections of the property’s structural integrity, mechanical features, and other details can help spot potential issues early. Instead of dealing with surprises in the future, it is much better to have the inspection done before you finalize your purchase decision.
To stay on the safe side, always hire a real estate attorney to assist you with contracts and other parts of the purchase. We actually covered the four reasons why you need a real estate attorney in a previous article, so be sure to read it to find out more about how an attorney can save you a lot of trouble in the future.
Don’t forget that you also have property taxes to deal with. Taxes and the previous fees mentioned earlier can be reduced by getting better deals. The appraisal fee, for example, can be waived by taking advantage of the free appraisal from your mortgage lender.
The Financing Costs
The majority of your purchase costs are related to the financing option you use. Fortunately, you can now use various online resources to find the best home loans. In fact, mortgage loans are becoming more affordable these past few months, mainly because the market is picking up and there are more options to choose from.
There are ways to save on your mortgage loan. You can start by finding a loan with the best APR or Annual Percentage Rate available. Comparing loans based on their APRs is always the way to go because APRs represent the real cost of mortgage loans more clearly than annual interest rates. Don’t forget to take discounts and special offers into considerations too.
Lastly, always ask for a better quote before agreeing to take out the mortgage loan. Lenders are competing for your business, which is why they will usually offer additional discounts when you ask. To lower your financing costs even further, get a mortgage loan preapproved instead of applying for one after finding a dream property to buy.
The real surprise comes after the purchase. Being a homeowner is not as easy as many people think, but it also doesn’t need to be complicated or expensive. To cover major repair costs in the event of a disaster or an accident, you can pick up a good homeowner’s insurance policy. The same can be said for third-party liabilities and other financial risks.
It is important that you set up an emergency fund for everyday repairs and extra costs. Small repairs are often needed in certain circumstances and getting them done as quickly as possible is the only way to go. You can prevent bigger, more expensive problems by taking care of smaller ones quickly and effectively. Having a sufficient emergency fund means you can tackle these small repairs without ruining your monthly budget or cash flow.
With the tips you can find in this article, keeping the costs associated with buying and owning a property in check will not be difficult at all. There are plenty of ways to save too, so be sure to take the time to explore them to avoid unwanted costs and surprises.
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