It is often said that buying a home can be very stressful. In fact, studies by Anxiety UK found that the home buying process can age you by up to 2 years. Another piece of research states that 40 percent of first-time homebuyers found it the most stressful experience of their lives. In many of these cases, the main reason cited is the lack of knowledge or unexpected events that can occur. However, before you begin saving up that home deposit or planning what your ideal bathroom would look like in your new home, here are a few things you need to know before starting the homebuying process.
The 10 Percent Deposit Is Just A Starting Point
While most lenders ask for a 10 percent downpayment in mortgage applications, the actual cost of buying a home is a lot more than that. There are also additional fees to consider like your mortgage application fee, home insurance, attorney fees, and home inspection fees. To avoid disappointment, add another 5-10 percent onto your home savings target when saving for a mortgage. It is much better to find out you have saved more than you need instead of finding out you haven’t saved enough and need to stop the homebuying process. There is a lot of costs that goes in like buying new furniture or kitchen cabinets. You would also lose a lot of money yourself if you did it that way.
Plan on Extra Expenses
Buying a home is a significant transition- and comes with transitional costs. Many homeowners often forget to budget for those costs when saving up for a new home and the cost of moving. It is not uncommon to find yourself having overlapped payments of rent for your apartment and your first month’s mortgage. Also, you may find yourself having to pay private mortgage insurance (PMI), additional moving costs, or inspection costs for your new home. It is generally recommended that new homeowners schedule an in-depth property inspection before finalizing the sale and this can easily cost between $300 and $450, according to Angie Hicks of Angie’s List.
Don’t Feel Obligated To Accept The First Mortgage Offer You Receive
Choosing a mortgage offer and lender is just like shopping around for your car insurance- there is no obligation until you sign the dotted line. In fact, many experts recommend shopping around and comparing mortgage offers before making a final decision. While it can be easy to feel pressured to choose a mortgage lender or accept an offer (particularly if you are a first-time homebuyer), take the time to shop around and compare mortgage offers. If you are feeling lost when it comes to the lending and mortgage landscape, working with a financial advisor can help.
These are just a handful of the things that are important to know before kicking off the homebuying process. Buying a home can be an incredibly exciting time for families- but it can also come with its challenges. By preparing yourself, your family, and your finances as much as possible before the process begins, you can focus on the joy of becoming a homeowner.
