First Time Home Ownership – Things to Be Aware Of

When it comes to buying a home, there are a lot of small extra things you need to take into consideration. Adding all these small things together may add up to an amount you did not plan for and may become quite a burden.

That is why it is crucial that you do your homework so you know what to look out for and what you can go without. This is also quite an exciting time in your life, but buying a house can be overwhelming.

Take a look with us at all the extras regarding buying a home so it will be a good experience for you.

First Time Home Ownership - Things to Be Aware Of
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Borrowing Via a Mortgage

Most of us cannot afford to buy a home with cash, so you will need to find someone to lend you the money. This is done by borrowing the money from any financial institute to buy the property and is called a mortgage.

As it is with any loan or credit, you will pay interest on the amount for as long as the mortgage is valid. The interest on the total amount of the mortgage is just one of the burdens the new homeowner will have to carry.

List Of Some Of The Fees

There is quite a list of fees that the new buyer may or may not need to be concerned with.

Monthly Payment

This is going to be the standard monthly payment you are going to pay on the mortgage until the home is fully paid. This may take quite some time, which can be up to 30 years of your life, depending on the original agreement.

Down Payment

Some lenders will require you to pay a down payment on the home’s original cost, which may be anywhere from 10 to 20 percent. This is done so the financial company can see that you are ready to commit to this enormous responsibility.

This website gives more information about the down payment and how to get ready to buy your first home.

First Time Home Ownership - Things to Be Aware Of
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Application Fees

This is a fee you need to pay to the bank or financial institute where you apply for the mortgage. It is a fee that is payable by the new buyer to the institute for the services of creating the loan.

There may also be fees for your credit report, as well as an underwriting fee that is usually a flat fee. 

Title Based Fees

These types of fees may include such things as title insurance and title insurance binder, just to name a few. Other fees might be title search fees and title settlement, but you are free to find your own services for better rates.

It is normally required of the new buyer to get title insurance to protect you from a myriad of things.

Appraisal And Survey Fees

If there is no appraisal available, a new appraisal needs to be done to determine the boundaries and the value of the property. This will be done by the lending institution to ensure the property is worth the money you are paying for it.

It may be good if the property is at the right value, but if they determine it is lower, there might be a problem. The buyer will pay this appraisal fee before the survey is done by the bank or lender.

Escrow Fees

At the closing of the home, a purchasing account will be opened where all the money is kept until all agreements are reached. These may involve quite a number of fees that need to be paid, so do some research here to keep you properly informed.

The form shown below is an example of what you may be seeing when it is time to take a look at the final process. This you need to go through thoroughly so you can make sure there are no hidden costs you are not aware of.

First Time Home Ownership - Things to Be Aware Of
Image Source: consumerfinance.gov

Summary

Get as much information as you can before you commit to lending via a mortgage or buying your first home. Your first home will probably not be the last home you buy, so keep an open mind before you commit.