The following is a guest post from Money Super Market:
Looking to buy your first property can be an exciting and nerve-wracking time as you take this first step on to the property ladder. It is quite common to feel overwhelmed by the process!
There are a number of difficulties associated with the process because of certain issues involved. However, there are ways to feel more comfortable with your decisions, including using a mortgage calculator to understand the financial impact.
As you may be aware, the real estate market has been suffering in recent years due to the global economic recession. Foreclosures have risen 20% in 2011, according to research from Bloomberg.
Many homeowners simply overextended their financial resources and with the cost of living rising and redundancy and unemployment issues, can no longer afford their mortgages.
This is why it is imperative for first-time buyers to run their numbers through a mortgage calculator. This will give you some useful information on which to base your decisions.
There are a variety of extra costs involved when purchasing a house besides the down payment. Some of these are unexpected or hidden and surprise first-time buyers.
Even some familiar costs, such as closing fees, can surprise home buyers because they often amount to more than expected. The combination of extra costs can be quite stressful.
Smart consumers will use the results of their mortgage calculator and research to get as close to an accurate estimate as possible for the extra costs.
Add in a contingency fund to give you a built-in safety net, so that when the bills arrive, you can comfortably pay them and have enough money for every other aspect of the move.
Figures differ for each cost depending on your state but a home inspection will cost $200 or more for a basic report. Expect to pay anywhere around $500 for a more for a thorough home inspection. These inspections check for structural damage and any infestation of termites and pests. Athough it can be tempting to save money by only having the basic inspection, however this isn’t always true. Any overlooked issues can become an expensive liability once you own the property.
Also factor in government fees which will include taxes and land transfer registration fees. These vary according to the house price and your state so research these thoroughly before committing to a house.
Closing fees can include ‘points’ which consists of; prepaid interest, application fees, loan origination fees, title searches and insurance, registration fees and attorney and real estate fees.
These figures will differ depending on your individual situation so ask for reliable quotes from the professionals involved. Also, don’t forget removal firm fees and utility connection fees.
Every situation is different, experts suggest you account for an extra 3% to 9% of the price of your home purchase to cover these costs. Being a first-time buyer can work in your favour as some lenders and sellers will absorb these costs to make the transaction more desirable for you. Do your research and you won’t suffer unexpected surprises that befall other first-time buyers.