- What is the Cost of Purchasing a Home: Is It Different for a First-Time Homebuyer
- What is the Cost of a Single-Family Home Inspection and Written Report for a First-Time Homebuyer
- Are There any Additional Fees Above the Total Home Inspection Prices
- Is the Home Inspection Report Included in the Price of the Inspection Services
- How Long Does a Home Inspection Take
- Resources and Programs for the First-Time Homebuyer
What is the Cost of Purchasing a Home: Is It Different for a First-Time Homebuyer
Buying a house is exciting; however, it can likewise be quite a demanding and lengthy process. The worst thing that can take place after you’ve signed your closing documents is an unforeseen and significant expense due to issues in the house that you weren’t warned of throughout the buying process.
This is why making sure to have a home inspection is so important, even more so for a first-time homebuyer, and why most real estate agents advise homebuyers to hire a licensed (depending on the State) home inspector when they are buying a home.
Some buyers decide to save a couple of dollars by skipping this step. While hiring a home inspector is an additional cost, doing so can assist you in avoiding pricey repair work, saving you money and time in the long run.
Let me tell you from experience; you do NOT want to be on the wrong side of a painted pig purchase!
This reminds me of the marshmallow experiment they did with kids several years back, essentially asking kids if they can delay gratification for a certain amount of time by not eating the marshmallow in front of them to get two later. Many flaws, don’t get me started, but this situation is very similar in that you are spending a small amount of money today to save a large amount of money down the road potentially.
How Much House Can I Afford
The amount you can borrow for a home loan depends upon just how much a conventional loan provider thinks you can payback. This amount isn’t just based on your income; there’s an entire host of aspects lending institutions think about when deciding who to lend to and how large of a mortgage they can afford.
These are the 3 main pillars mortgage lenders utilize when deciding how large a loan you can afford:
- 1. Credit reliability– Do your credit report, and credit report suggest you’re an accountable borrower who will prioritize your monthly mortgage payments?
- 2. Down Payment– The more cash you put in, the less the lending institution stands to lose if the loan defaults.
- 3. Debt-to-income (DTI) ratio– When getting a mortgage, your income is always viewed in the context of your debt problem.
Each of these factors is approximately as important as the others. And each one will have a significant effect on how much home mortgage you can manage.
What is the Cost of a Single-Family Home Inspection and Written Report for a First-Time Homebuyer
According to the Department of Housing and Urban Development, HUD for short, the national average home inspection fees, or the average cost of a home inspection and report:
“Costs vary dramatically, depending on the region, size, and age of the house, scope of services, and other factors. A typical range might be $300-$500, but consider the value of the home inspection in terms of the investment being made. Cost does not necessarily reflect quality. HUD Does not regulate home inspection fees.”https://www.hud.gov/program_offices/housing/sfh/insp/inspfaq
Surprisingly enough, this average home inspection cost range provided by the Department of Housing and Urban Development was pretty accurate, at least for the Greater South Puget Sound and its surrounding counties and cities!
In my experience as a licensed and certified professional home inspector in Olympia Washington, a single-family residential home will have an inspection cost of roughly $400 to $500, depending on size, location, and age! You can find a home inspection cost calculator here, on spsinspections.com, to get a feeling for what it would cost to have your house or prospective home inspected professionally.
Maybe yes, maybe no. Haha, but in all sincerity, the previous was a correct answer to this question! Allow me to elaborate for you. Home inspecting is not the type of industry that is strictly regulated by any particular local governing body, per se. As such, it is left to the home inspector to decide the prices he/she would like to charge for their services.
Many times when you hire a home inspector, you are charged depending on the size or square footage of the new home you are buying. There are also a couple of other ways house inspectors go about determining the property inspection cost, but we will not get into them here.
In addition to the average home inspection prices, most inspectors will provide at least one or two ancillary services for their customers for an additional fee, typically $50 to $150, depending on the service. This could consist of offering mold testing services to your clients, private well water testing services, and ala carte inspection services among MANY more.
No home is perfect (yes, this even includes new and recently built construction). A good home inspector who provides good customer service will usually discover some issues needing attention or problems that the buyer and seller should be made aware of. Going to the following link will take you to view some sample home inspection reports from SPS Inspections – the premier provider of home inspection services in Thurston County and the Greater South Puget Sound!
Once there, feel free to download the sample inspection reports, or view them as a PDF right in your web browser!
Although the exact length of time a home inspection lasts will be determined by several factors, from the quality of home inspector you hire to the standards of practice they follow.
Whether your inspector performs services above and beyond their scope of work, or if they fail even to meet the bare minimum, an average home inspection will last two to three hours. We find if you plan for the inspection to be three hours, this will usually be enough time for the inspector to evaluate what they need to.
This is also going to depend on what type of building is being inspected.
Chances are, a condo inspection or an apartment inspection is not going to take as long to complete as a single-family residential inspection or a multi-family home inspection.
You Don’t Need to do it on Your Own
As a first-time homebuyer, you’re probably wanting to save anywhere possible. While you might think foregoing a real estate agent will conserve money, in reality, the expense of employing one is factored into the cost of the home. In addition to assisting newbie property buyers through the typically intricate procedure of buying a home, a great Real Estate Agent can likewise negotiate on your behalf and help you minimize the house’s final cost.
A real estate agent will assist you to find houses that satisfy your requirements and remain in your rate range, then meet you to view those houses. When you’ve chosen a home to buy, these experts can help you in negotiating the entire purchase procedure, consisting of making an offer, getting a loan, and completing paperwork. An excellent genuine estate agent’s competence can protect you from any risks you might encounter during the process. A lot of representatives get a commission paid from the seller’s profits.
Contacting the chamber of commerce in the neighborhood where you prepare to sell or buy could be a great way to discover active representatives in their local communities. You can find NAR members through the association’s Find a Realtor form or a search based on geography. Another alternative is to call realty brokerage companies, picking either a nationally known one or an independent brand with a strong local existence and credibility.
About 40% of house sellers discover their agent by doing this, according to the NAR. Cast a wide web by talking with individuals you understand well, consisting of work associates and neighbors who recently dealt with an agent. Do not forget to utilize your social media connections. That testimonial carries a lot of weight and can provide you a behind-the-scenes look at how the representative handles the procedure when you get an individual recommendation from somebody you trust.
What is Private Mortgage Insurance and When do I Need it
When you purchase your house, you’ll need money for a down payment and closing costs. The down payment typically varies from 5% to 20% or more. Putting less than 20% down will typically require you to pay for private mortgage insurance coverage. Closing costs might be about 3-7% of the total loan quantity and consist of loan program costs, title insurance coverage, and appraisal charges.
Private Mortgage Insurance (PMI) is insurance coverage that makes homeownership possible for property buyers who don’t want to make a 20 percent down payment. You, the debtor, pay PMI premiums to safeguard your mortgage lending institution from default and foreclosure if you were to stop working to repay your premiums. The amount you can borrow for a home loan depends upon just how much a loan provider thinks you can pay back. This amount isn’t just based on your income; there’s an entire host of aspects lending institutions think about when deciding who to lend to and how large of a mortgage they can afford.
These are the 3 main pillars mortgage lenders and mortgage companies utilize when deciding how large a loan you can afford:
- 1. Credit Score Requirements— Do your credit report, credit cards, and credit report suggest you’re an accountable borrower who will prioritize mortgage payments?
- 2. Down Payment– The more cash you put in, the less the lending institution stands to lose if the loan defaults
- 3. Debt-to-income (DTI) ratio– When getting a mortgage, your income is always viewed in the context of your debt problem
Each of these factors is approximately as important as the others. And each one will have a significant effect on how much home mortgage you can manage. If you fail to pay your mortgage, the lender can “cash in” the homeowner’s PMI policy to recuperate its lost cash. When the home purchaser makes a down payment of less than 20 percent, conforming home loan lending institutions need PMI. When the balance drops to below 80 percent of the initial sales rate, PMI later self-cancels. It’s also good to keep in mind that you will need homeowners insurance as well as PMI.
Don’t Forget About Taxes and Other Expenses
Property tax is a tax paid on residential or commercial property owned by an individual or other legal entity, such as a corporation. The majority of frequently, residential or commercial property tax is a property ad-valorem tax, which can be thought about a regressive tax. It is determined by a city government where the home lies and paid by the property owner. The tax is normally based on the worth of the owned home, consisting of land. However, lots of jurisdictions likewise tax tangible personal property, such as boats and vehicles.
A capital gains tax is a tax on the development in the value of financial investments sustained when corporations and people offer those investments. When the properties are offered, the capital gains are described as having actually been “realized.” The tax doesn’t apply to unsold investments or “unrealized capital gains,” so stock shares that appreciate every year will not sustain capital gains taxes until they are sold, no matter the length of time you take place to hold them.
Real estate capital gains are taxed under a different set of standards if you’re offering your principal home. Here’s how it works: $250,000 of a person’s capital gains on the sale of a home are omitted from gross income ($500,000 for those married filing jointly). This applies so long as the seller has actually owned and resided in the home for two years or more.
Resources and Programs for the First-Time Homebuyer
If you are a first-time homebuyer, take a moment to pat yourself on the back for getting to this point in life for one, and then it would be a good idea to read on because, for all of you who are first-time homebuyers, there are many programs out there to help you obtain your first home!
From Fannie Mae to Freddie Mac, Federal Government subsidy programs, and guaranteed loans with lower to no interest rates are available to help you with your first-time homebuying process! A great place to start your own research would be the main website for the FHA, the Federal Housing Administration. Besides some credit unions, FHA loans are some of the easiest to obtain with lower credit scores and a lower monthly payment.
The following are links to a couple of first-time homebuyer programs that may be of use to you in some way!
- Washington State Mortgage Assistance
Other Articles of Interest
- FHA Loan Requirements And Minimum Property Standards for Lending
- Behind The Scenes: Understanding Foreclosures
- What Are Real Estate Purchase Agreements, Home Buying Contracts, and Inspection Contingencies
- Real Estate Owned: Everything You Need To Know About REO’s In 2020
- How Millennial Home Buyers Are Changing the Real Estate Industry