Buying a home is an exciting prospect you may experience more than once in your life, but each time you do so, it is important for you to plan appropriately for the upcoming process. When buying a home, there are costs to consider in addition to calculating and budgeting for a home's needed and essential repairs. Here are some recommendations to help you prepare for some of the costs associated with buying a house.
Plan For Financing and Professional Costs
When you buy a house, you need to arrange for the payment of the home, traditionally through a mortgage lender. In this process to secure the financing, there can be a variety of costs that you will need to cover: some at the time they are completed and others when you close on and purchase the house.
First, you will need to pay for your mortgage underwriter fee in completing the loan approval process and pay the cost of acquiring your credit report information from all three main credit bureaus. Then, a mortgage loan will usually require you to appraise the home to make sure it is worth at least what the loan is for, which will secure the bank's position in the transaction. Often, the appraiser will require you to pay them at the time they complete the appraisal, which can be several weeks before you close on the home.
Then, you will also likely need and want a home inspection to make sure the home contains specific protections and details that are required by the loan financing. For example, if you are applying for a HUD loan, the lender may require that certain safety requirements are met in the home, such as a stairwell railing being installed and all outlets being properly covered. The inspector can require their payment for services to be made at the time the inspection is completed, so be sure to have these funds available to pay in addition to any others needed.
Consider Needed Repairs
When you tour a home that you are considering purchasing, it is important to not overlook any of the home's deferred maintenance needs. Not every home is a turnkey home, with nothing requiring repairs or work. Often you will find a home you like for sale that needs some small repairs.
For example, the home you are considering buying might have carpeting that has seen better days and needs replacement. The sellers may have had pets in the home that stained and damaged the carpeting. When you plan to replace the carpeting soon after buying the home, you can ask the seller to reduce their price to allow for the carpet's replacement.
You can also request that your lender provides you with the cost to cover the carpet's replacement, and then when you close you get an allowance to cover new carpeting. This type of home repair allowance will be combined into the home's purchase costs so you don't have to finance it out of your own monthly income.
When you're ready to start looking at homes for sale, reach out to real estate agents in your area.