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What Are The True Costs Of Buying A Home?

additional costs of buying a home san diegoIt’s time to buy your first home. You’ve saved up for your down payment and gotten a pre approval from a lender.  You’ve got a great realtor and  are ready to find the perfect home.  Once your offer is accepted, you’ll need to be aware of additional out-of-pocket costs you will incur over up to, and immediately after closing, some you may already know, some not:

Home Inspection

Having a home inspection is not required, but it is something you should definitely have done.  Costs vary, but generally average around $375, depending on square footage and services added.

Appraisal

Your lender will order the appraisal and you normally will have to pay for it upfront.  Expect somewhere between $400-$500 for single family home.

Homeowner’s Insurance

You are required to purchase homeowner’s insurance in order to close on your home.  This protects you, as well as your lender from the inevitable. Homeowner’s insurance prices vary from $700-$1500.  Basic insurance coverage for the area you want to live in may not be adequate.  For example, if you live in an area designated as a flood zone or fire zone, you should insurance for those as well.

Additional Repairs/Improvements

Sometimes, sellers won’t or aren’t financially able to assist with repairs so they sell the house as-is.  If you really want the house, you might need to save money for things you will need to do in order to make the house livable or updated to your tastes. Make this budget beforehand for unexpected repairs or home improvements you want to make. This could be adding a fresh coat of paint, new carpet or adding in hardwood floors, is a good idea.  Costs can vary widely.

Appliances

Normally all appliances are included by the seller, with the exception of the refrigerator and washer/dryer. This is normally written into some real estate contracts as being sold with the property. With that in mind, plan ahead to have money budgeted for a refrigerator, washer/dryer.  If you like some of the seller’s appliances, specify which ones you’d like to remain since everything is negotiable.

Moving

Whether you’re hiring a company or renting a truck, moving costs can be more than you think. If costs of buying a homeyou are renting hourly, build in an additional two hours to your projected costs. Don’t forget to include in your budget calculations, the deposit, which although you get it back, can temporarily decrease the cash in your pocket.

Utilities & Security Alarm

Depending on your credit, some utility companies require deposits and there may be other miscellaneous fees to transfer or start services.  Costs will vary.

Move in Day!

After closing, you may want to visit the house and start cleaning before you have the movers or your rental truck arrive.  It’s much easier to do this before all your stuff arrives. Remember to include cleaning supplies or the cost of a cleaning service in the budget.  Don’t forget your toiletries, light bulbs and extra batteries.

Blinds

Depending on your agreement with the seller, blinds are not always included in the sale. If not, now you feel as though you’re living in a fish bowl. Putting up old sheets in your brand new home is no good and a huge eye sore for your new neighbors. Visit your local home improvement store for temporary blinds.  Temporary blinds cost around $12 and up.

Rekeying your Home

Before you get handed keys for your new home, keep in mind how many other hands they have been in during the whole process. It ranges from the sellers, to real estate agents, to contractors, utility companies, etc. Don’t risk it, have you home rekeyed. Costs for rekeying all your locks by a locksmith can run anywhere from $75-$200.

New Furniture

Shopping for new furniture for your new house can be fun and exciting. If you are moving into a bigger space, you may not know how little furniture you had until after moving.  Anticipate buying accent chairs, art, rugs, mirrors, etc. Costs vary.

Happy House Hunting!

 

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com

What Does Homeowners Insurance Cover?

Homeowner’s insurance (not to be confused with a home warranty) pays for losses and damage to your property if something bad happens, such as a fire or burglary. So while homeowner’s insurance protects your property from unforseen events. Private mortgage insurance is different—it protects the lender if you stop making payments on your loan. Standard homeowner’s insurance doesn’t cover damage from earthquakes or floods, but can normally be added for additional charges. These charges can be considerable if you live in a high risk area.

When you have a mortgage, your lender wants to make sure your property is protected by insurance (to protect themselves from loss). That’s why you’re generally required to have homeowner’s insurance, and prove to your lender that you have it. If you don’t have insurance, your lender is allowed to actually buy it for you and charge you for it (with advanced notice).what does homeowners insurance cover?

How To Pick A Great Mortgage Lender

Let’s be honest, when buying a home, there are so many things to think about! One of the most complicated decisions you will likely make will be which lender to pick. Today there are tons of lenders out there ready to accept your loan application. But just because a lender accepts your application doesn’t mean they are the right one for you. Since you’ll likely be paying on this loan for years to come, it’s important to make sure you shop around and choose the right lender (and loan) that fits your needs. Here are five tips for picking the right mortgage lender.

1. Decide whether you need a mortgage broker

There are benefits to working with a mortgage broker because they have access to multiple mortgage lenders, which saves you time. However, there are some drawbacks you should be aware of when working with a mortgage broker. They earn their profits by arranging the deal between the lender and the new homeowner. So essentially, they are a middleman, which can work to your advantage, however. Good mortgage brokers will choose from the best performing banks, knowing which ones are most likely to close without a hitch.

2. Decide what kind of lender you wantchoose lender to buy home in san diego

If you are someone who prefers more personal customer service and a lender who knows your name, you would likely want to go with a smaller local lender. Some people prefer to get a loan where they are currently banking already, thus keeping all their accounts in one place. This is great for convenience, but this might not get you the best rate and terms. Researching the differences between larger lenders and smaller ones will help you decide which fit is best for you.

3. Ask around

A broker is not the only way to find mortgage lenders. Ask your friends, family members or coworkers who have purchased a home within the last few years about their lenders. Getting referrals from those close to you can help you cut through the sea of prospects to find someone you know you can trust.

4. Talk to your real estate agent

A good agent will not limit recommendations to his or her in-house lenders, and smart loan officers take especially good care of customers recommended by real estate agents. Since real estate agents do multiple transactions per year, that’s multiple lenders they come in contact with!

5. Research the lender’s reputation

No matter how you hear about a lender, it is imperative to do a background check. If you can get names of past clients, make sure you speak with them. Google them, check online reviews and don’t hesitate to bring up any questions you have with a potential lender. Learning as much as possible about who you might be dealing with can save you a number of headaches later on.

Most home buyers don’t realize picking a bad lender can reduce their chance of getting an offer accepted in the first place. In a competitive housing market, listing agents will encourage their sellers to pick offers from lenders with a better known reputation. Sometimes this is the main deciding factor when multiple offers are nearly otherwise identical.

Shopping around for the right mortgage lender can be daunting. There are numerous lenders available and more seem to be popping up all the time. It’s important to know what you’re looking for and to do as much research as possible.

 

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com

How Much Of A Down payment Should I Do?

When is time to buy a home, most will take out a mortgage. There are many things to consider when taking on a mortgage loan, including interest rates, closing costs and the down payment. Once you calculate the price of a home you can comfortably afford, you can start looking at properties.

There are several ways to fund what will likely be the biggest purchase of your life. Before you sign any loan documents, it’s a good idea to consider what amount to make for your down payment, and how that will affect you both immediately and in the long run.

how much down payment to buy a san diego homeThe Basics

In case you are buying your first home, a down payment is the amount of cash you pay upfront when buying a home. This money shows the lender that you are capable of saving and willing to risk this money in the purchasing of the home.

Conventional Loans-The Magic Number

You’ve probably heard that 20% is the magic number for a down payment. While some people (like veterans) can qualify for homebuying assistance, most people will have to put 20% down to secure their mortgage without paying private mortgage insurance (thus adding to your monthly payment). Private mortgage insurance (PMI) covers the lender, in case you get into trouble making payments down the line.

With a 20% down payment and buying an averaged price home of $430,000 in San Diego, that would mean a down payment of $86,000. This is quite a bit of money, especially for first time homebuyers. Plus, there are additional closing costs. Luckily, newer conventional loan programs allow as little as a 3% down payment, although private mortgage insurance is must in these cases. 

FHA Loans

While the financial crisis left many homeowners defaulting on their little-to-no-money-down mortgages, the tide has turned again, and now the minimum amount needed for a FHA loan is only 3.5% (there are some zero-down mortgage programs, but with restrictions). FHA loans are great for homebuyers that don’t have stellar credit and lower amounts of cash for a down payment. Private mortgage insurance (PMI) rates are higher with these loans than its conventional counterpart.

Any good lender can tell you if you qualify for a loan backed by the Federal Housing Administration (FHA). You can also look for state and region-specific down payment assistant opportunities through your local government. If you are buying a house with less than the typical down payment needed, it’s important to know that you are taking on more risk, and the loan will normally cost you more in the long run.

Before you apply for a home loan, it’s important to know what your credit score is. The difference of just a few credit score points can mean a lower interest rate and a major savings over the life of your loan.

Your down payment amount makes a big difference both now and in the future, but it’s a good idea to leave yourself enough money to afford your next few monthly payments as well as closing costs and other repair & maintenance expenses the house may need. Remember, this is just the beginning.

 

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com

 

Tips For Buying A Fixer Upper

The single best way to stretch your budget and find the home of your dreams, is to find the right home in the right neighborhood that needs some work.

Fixer uppers allow you to access a more desirable neighborhood than you may otherwise be able to afford. In other words, you are buying one of the worst homes in the best neighborhood possible.

The key for you, the buyer, is to determine the appropriate level of fixer. In general, the more of a fixer, the more potential upside you will get. Homes with water or structural damage can be the most risky. So this has to be balanced with your budget for repairs/upgrades, your knowledge of how to handle issues efficiently, and your appetite for sweat equity. Do you want to manage remodeling the whole home? It has the potential to be very lucrative, but can also be exhausting, even if you are’t the one doing the work.buying a fixer upper in san diego

It’s important to also be aware of the different levels of fixing. Remodeling a kitchen costs the same no matter how old it is – you still need new cabinets, countertops, flooring and appliances. So, when evaluating, no matter how good or bad the kitchen, the cost to remodel it is the same. But – you will probably pay more for a house with a “kind of old kitchen” compared to an “extremely old kitchen.” Bottom line: A really bad kitchen can be a good thing.

Certain things are very inexpensive and produce a high return; paint, a new front door, and landscaping produce the easiest and best return on investment. Other items like system repairs (heating and cooling, electrical, roof and plumbing) produce almost no investment return. Bathrooms, also, generally produce a small return.

One last caution, people tend to overspend to get what they want, and that is totally fine. Just realize it goes past the initial investment goal and into personal valuation. For example, a neighborhood may support a $20,000 kitchen, but you may really want the $35,000 kitchen. It’s fine to upgrade, but when you re-sell, you may lose some of that value. Just make sure you enjoy it along the way.

If you have any questions about fixer uppers in the San Diego area, let me know!

 

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com

5 Mistakes Home Sellers Make

Selling your home can be stressful. You may have an emotional attachement to your home, and you might envision a specific buyer. You might also think your home is worth more than market value, or that your roof is just fine while a home inspector says otherwise. There are so many factors, and especially if you are in a time crunch, waiting for an offer to come in can be very difficult.

While it’s important to take the right steps in order to make your house sell, there are also mistakes that you need to avoid. Being too involved in the sale of your home, expecting too high of a price, ignoring curb appeal, not making fixes, and choosing the wrong realtor are all significant mistakes that you want to avoid when trying to sell your home.

 1. Being too involved

It’s easy to think that we will quickly get multiple offers on our house and that it will sell for the amount that we hope to get. It’s also easy to allow yourself to become too involved in the selling process. It’s important to try to keep your own feelings and memories out of the sale as much as possible. Perhaps you have lived in your home for 25 years, and you picture a young family raising their kids like you did. In the end, what really matters are the offer details and your bottom-line proceeds from the sale. Let your realtor deal with the other issues.

2. Expecting too much

It’s important that you price your home appropriately. Any realtor can provide a comparable market analysis (CMA) to determine what your home is worth. You need to be prepared for a fair offer, might not necessarily be the ideal offer you would hope for. Expecting too much can scare away buyers if you overprice your home. Your home will sit on the market and become a “stale” listing. You may also overlook appropriate offers if you expect more than your home is worth.
selling your san diego house3. Not considering curb appeal

No matter how great your home is on the inside, having your home looking desirable on the outside is crucial to selling your house. Curb appeal is very important to most buyers, so be sure to look at your front yard and everything else that is visible from the street. Many potential buyers will “drive by” your home beforehand, so first impressions are critical. Buyers can easily ask a realtor to bring them to a specific house, and this is might happen if a buyer wants a home in a particular neighborhood. Neglecting to take care of the curb appeal of your home could cause buyers to skip it.

4. Not fixing minor or cosmetic issues

Some sellers decide to sell their home “as is,” which can be the right choice in certain situations. If you are in a hurry to get out or your home needs a lot of renovations, you may actually attract “flip” type buyers by pricing your home low, knowing that  it needs work. However, if you are hoping for top dollar on your home, you need to fix any problems. Cosmetic issues can be especially distracting to buyers. Buyers may see old wallpaper and see dollar signs, or find other minor problems and decide your home isn’t worth purchasing because the home down the street is more “move in ready.” Even knowing that fixing the problems would cost buyers very little, you still might be better off fixing them yourself.

As far as bigger issues are concerned, sometimes these come up during a home inspection. These could be things like roof leaks, hidden water leaks, or structural damage. If you know of an issue ahead of time, you can ask your realtor to explain to potential buyers how you plan to deal with the issue.pick a realtor

5. Picking the wrong realtor

Speaking of realtors, make sure you choose carefully. There are no shortage of realtors out there. If you are uncomfortable with a certain realtor, or a particular person seems too busy or hurried to listen to take the time needed, you probably don’t want that person to be your realtor. If you choose a realtor who is too busy or unwilling to market your house, give regular open houses, and work with potential buyers, you may have to wait longer to sell your house.

 

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com
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