Buying a house for the first time is a big decision that can be both exciting and stressful. You’ll be exposed to new environments, take on new responsibilities, meet new people, and have greater freedom to define your own personal space. However, one challenging aspect in being a first-time buyer is not knowing how much money you should be saving in order to purchase your dream house.
Houses for sale have different price range, as their sale value is affected by factors such as location, upgrades, size, age, and condition. So, the question now is, how much money should you really save up to avoid unwanted surprises of the house cost? Have you figured it out yet? No worries, because this article will help you prepare for your first home purchase.
The Down Payment
Buying a house is rarely a tangible transaction. As it is expensive to purchase a home, most new homeowners acquire a home through mortgages. The first step toward home ownership is making a down payment. It is typically a percentage of the total cost of the house. For example, if the building’s purchase price is $500,000 and the required down payment is 10% of that, you’ll need to save $50,000. Actual down payments differ depending on the percentage. Some require a 20% down payment, which can be really expensive for first-time buyers.
The source of funds for your down payment will be determined by the type of mortgage you apply for. Usually, it should come from a personal fund. When saving for it, the best thing to do is look at the prices of houses for sale and the percentage required for the down payment.
Closing Costs
Always keep track of how much money you’ll need for closing costs. Purchasing a house for sale on the market necessitates the compliance of several requirements. Closing costs can range from 2% to 3% of the loan amount. If you have a $300,000 mortgage, you may need $6,000 to $9,000 just to cover the closing costs. Closing costs can vary depending on whether you have a real estate tax or mortgage stamps, which are government-collected taxes based on your mortgage. Title Search, Title Insurance, Attorney Fees, Home Inspection, Real Estate Transfer, and Mortgage Taxes are all examples of closing costs.
Prepaid Expenses
This usually applies to people who buy new houses or condos with loans that include escrow for real estate and home insurance. They would require an upfront fee to ensure that every payment is made. However, for those who do not rely on lenders, a one-year home insurance fee will be required. The frequency of collection may vary depending on the estate. Prepaid expenses in some areas can be as high as 2% of the loan amount.
Utility Adjustments
Keep in mind that a house for sale is not always fully ready. For example, some cities and towns charge water and trash removal fees on a quarterly or semi-annual basis. In this case, you may need to pay the seller for fees that they have already paid that go into the time frame when you will own the home. The amount for utility adjustments is always determined by the seller’s utility costs.
Mortgage Financing
The majority of first-time home buyers use mortgage financing. Even so, if you choose to finance the purchase through a lender, you will need to make a down payment. There are also various types of mortgages, and it is always best to seek the advice of a professional real estate agent when making such a decision. In other words, you must plan for a down payment of 10% of the purchase price, a closing cost of 2.5 percent, prepaid expenses of 2%, and utility adjustments.
Call for the Best in South Shore!
When it comes to buying a home on the South Shore of Massachusetts, Team Garner Realty Group is the best place to start. They have the best real estate agents who can assist you in finding the best home. They are the best people to ask for suggestions and discuss your preferences in a home because they live in the area. The firm is made up of associates who work hard to understand all aspects of home buying. Only at Team Garner Realty Group will you find people willing to go the extra mile for you! Call them today at 781-829-4301 and let them get you started in the right direction!