Buy a House

Since many Millennials are choosing to buy a house over rent, it’s important to prepare for what will likely be their largest financial investment. Sure, depending on the loan you secure, you’re going to need somewhere between 3-20 percent of the purchase price as a down payment. However, this isn’t the only capital you should be accounting for. When purchasing a home, there are many other costs involved which are important to make note of. You may have the 20 percent to put down, but if that is everything you have saved, how will you afford the move, insurance, repairs that are bound to arise? Before you start looking at homes, it’s important you figure out a proper budget.

1. Down Payment. This is listed first because it is the most obvious and the first thing that any buyer thinks about when purchasing a home. Depending on the loan you secure, this may be anywhere from 0 to 20 percent of the purchase price. Yes, there are 100 percent financing options, but before getting too excited, you’ll want to sit down with several different lenders to see what kind of loans they have to offer you. Anything less than 20 percent down typically means you’ll be paying PMI (private mortgage insurance) on a monthly basis. Find out what’s available to you, weigh your options, and get pre-approved.

2. Moving Expenses. This one is a little less obvious to some. While it may be a thought in the back of your mind, for many it’s nothing more than a thought. Turn this thought into a serious consideration. Whether you’re moving down the street or across the country, there’s bound to be some moving expenses. Figure out approximately what this cost will be so you can factor it in to your expenses.

3. Closing Costs. Here’s something most buyers don’t think about. In order to close escrow on a house, there are a number of closing costs you’ll need to pay at the close of escrow. These costs are ON TOP of your down payment. Closing costs include: title and escrow fees, lender fees, etc. Typically, you can plan for about one percent of the purchase price of the home in closing costs.

4. Home & Mortgage Insurance. You will definitely need homeowner’s insurance to protect this new investment of yours and, again, depending on the loan you’ve secured and how much money you’re putting down, you may need to pay mortgage insurance as well.

5. Property Taxes. Here’s a fun one that most first-time homebuyers don’t think about. In fact, many home buyers across the board don’t think about it. Look into the property tax rate in your area so you know how much tax to expect. You may be able to pay in installments, depending on where you live.

6. Repairs & Maintenance. We saved this one for last because it is usually the last thing homebuyers think about. When you buy something “new” you don’t expect to have to repair it. Think again. Just like buying a car, there are plenty of systems in the house that can fail on you. This is why you want to be sure that, as a buyer, you’re protected with a home warranty. In the state of CA, it is customary that the seller pay for the first year of the buyer’s home warranty. After that, it’s up to you. You’ll want to ensure you have enough cash for any maintenance or repair needs in case something important in your home fails.

Kurt Galitski

Meet Kurt Galitski - The Kurt Real Estate Group, your new best friend. Distinctive Strategies that Deliver Record-Setting Results. When you combine Kurt’s passion and knowledge of the real estate market, you really gain an appreciation for what makes Kurt different. But what truly sets him apart from the crowd are his 5 distinctive strategies and his property management… For Kurt, getting into real estate was not an accident, it was a deliberate and calculated decision to deliver a better experience to home buyers, sellers, and landlords that they have ever received before. Today, you could ask any one of hundreds of clients, read his Yelp reviews, or look at his track record of being featured in Orange Coast Magazine in excess of eight consecu­tive years and you too will say mission accomplished. 877-957-6677

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