NEW YORK, Jan. 18, 2022 (GLOBE NEWSWIRE) — Buying your first home is an incredibly exciting experience. But when unexpected expenses crop up, from closing costs to taxes and maintenance, being a new homebuyer suddenly feels like an ATM. The good news is that the home buying process doesn’t have to be surprising. Here are three ways first-time home buyers can prepare to expect the unexpected.
Know the cost of buying a home
The big focus of many first-time buyers is raising enough money for a down payment. And while the down payment can certainly be the largest lump sum payment anyone will make, there are many other expenses that come with it. However, keep in mind that some of these expenses can be converted directly into a mortgage, so new homebuyers may not necessarily need to have cash on hand to cover all expenses.
Unexpected costs when buying a house can be:
- Closing costs, which can include appraisal fees, title insurance, lending fees, and more
- property taxes
- Homeowners Insurance
- Homeowners Association (HOA) Fees.
- utility bills
- household appliances and furniture
- Maintenance including painting or minor renovations prior to moving in
Get pre-qualified or pre-approved for a mortgage
Pre-qualifying for a mortgage gives borrowers an idea of how much they can get based on their finances and credit. Pre-approval goes one step further to almost complete the underwriting process and grant a homebuyer a specified amount of credit that is valid for 90 days. These options can help buyers better understand how much loan they can expect.
Once a buyer has determined the amount of credit they can get, it’s wise to understand how they will cover the cost of that credit if something unexpected happens. This means a homebuyer will assess their monthly cash flow to confirm they can cover the cost of borrowing, and may want to consider purchasing term life insurance to cover the mortgage should he or she die unexpectedly.
This can be an especially good idea for couples. The right term life insurance can provide financial security so the surviving spouse can pay off the mortgage without worrying about the significant debt burden that a mortgage can bring.
Decide on contingencies
A contingent liability is part of a real estate contract that protects first-time homebuyers by providing them with a payout under certain circumstances. Common contingencies include home inspections, appraisals, and mortgage approvals. It works like this. In a situation where a buyer has an emergency for a home inspection, the buyer may choose to walk away with their cash if the home inspection comes back with more problems than they are willing to accept.
First-time homebuyers need to know which contingencies they feel need to be considered and which ones they are happy to forego. Sometimes, forgoing a contingent liability can make a buyer more attractive to a seller looking to move a property quickly. But the risk is that skipping an eventuality like a home inspection could land the buyer in a money pit full of problems.
The final result
First-time homebuyers can get confused with the various aspects of the real estate process. And this is where finding a great real estate agent comes in handy. The right real estate agent can help any first-time home buyer better understand the cost of buying a home, how to prepare financially, and what eventualities to expect. In this way, the buyer lands the house of his dreams without any unexpected surprises.
This content was distributed via Newswire.com’s press release distribution service.