What’s this really gonna cost?

The elephant in the room is always the big 'M' word – MONEY.

Moolah, dolla dolla bills, or however you personally like to say it. If you’re anything like me the one question swirling in my mind is always…

How much is this gonna cost me?

Before you start envisioning paint colors and backyard barbecues with friends, let me pull back the curtain a bit on the dollars and sense behind buying your first home. Spoiler alert: it's not all about finding that Instagram-worthy kitchen (though that's certainly a perk).

Home prices are like shifting winds, varying wildly depending on the specific market you’re looking to buy in. Whether you're drawn to the vibrant pulse of city life or the tranquility of the countryside, the price tag on your dream home will have a mind of its own. One key insight to remember, it’s to get serious about caring for your credit score – THAT magical number that can swing open the doors to the best mortgage rates in town. Think of it as your financial report card – the shinier, the better. A stellar credit score can be your golden ticket to saving big bucks in the long haul.

Now, let me slice all this up into two neat categories: Upfront costs and Ongoing costs.

Upfront Costs:

Down Payment:

Consider the down payment your upfront investment in your future home. Instead of shouldering the entire purchase through a mortgage, you're paying up a chunk of change right off the bat. For instance, eyeing a $375,000 home? Slap down 5 percent, and that's $18,750 straight from your pocket. The remaining $356,250 is what you will seek a mortgage for.

The amount required for your down payment typically mirrors a percentage of the home's total price and varies based on the mortgage loan TYPE you opt for. Generally ranging from 3% on up to 20% + down payment options if that better fits what you’re looking to do. Annnd if you're fortunate enough, some loans even offer the tantalizing possibility of buying with no money down at all. Salute to our veterans.

Closing Costs:

Ah, closing costs – one of the most commonly used terms, and most misunderstood components of the ENTIRE PROCESS. So let me give you an idea of what closing costs are made of. These expenses can vary depending on your location but typically hover between 2% to 5% percent of the loan principal.

Here's a breakdown of what you might encounter:

- Application and Credit fees: A nominal fee to kickstart the loan application process and assess your creditworthiness.

- Appraisal: A crucial step to ensure the house's value aligns with the loan amount.

- Home inspection(s): Highly recommended to catch potential issues early on (there are many types of inspections available to you, from Radon testing, sewer line inspections, to General Home Inspections.

- Origination and underwriting fees: Administrative charges covering the costs of generating and processing the loan.

- Title insurance and search fees: Protection against ownership disputes and verification of the property's title.

- Transfer tax: Covering the administrative costs of transferring the property title from seller to buyer. Various standard items might wrap inside the term “closing costs,” but their actual costs can fluctuate based on factors like the home's value and the partners/vendors you choose to work with.

Cash Reserves: To ensure you're not draining your bank account dry, lenders may require proof of additional cash reserves. Consider it a safety net, demonstrating your ability to weather the storm of mortgage payments.

Often Overlooked ⭐️

Moving: Don't overlook the potential cost of moving, whether you're DIY-ing it or calling in the pros. Brace yourself for what may be sticker shock, especially for long-distance moves.

Ongoing Costs:

Mortgage Payments:

Get cozy with your monthly mortgage payment – it's about to become your new best friend. Budget wisely around this cornerstone expense.

Property Taxes:

Taxes – they even follow you home. Typically bundled into your monthly mortgage payment, these taxes can fluctuate based on property values in your area.

Insurance:

From homeowners insurance to private mortgage insurance (PMI), protection is key. Shop around for the best deals and bid farewell to PMI as you chip away at your mortgage.

And there you have it – a glimpse into what makes up the real estate math of Buying your first home. With foresight and savvy decision-making, the keys to YOUR home are within reach.

Remember, the point of all this preparation is becuase I want you to feel empowered & confident when navigating the intricate landscape of real estate transactions on the way to a place you can truly call your own.

That’s all for now

Joe