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The housing market has been heated in recent years. You might have noticed that real estate listings had steep prices and even steeper competition. Potential buyers clamored to make higher and higher bids on available homes, offering well above the asking price to win out and get those house keys in their hands.
The good news is that the housing market appears to be cooling down. Housing prices have steadied and dropped a bit, and sales have slowed down. This will give prospective buyers some time to search for their favorite options without facing a fierce bidding war.
Are you interested in joining the housing market? Look at the expenses you’ll need to make to buy a house.
What You’ll Need to Buy a House
A Down Payment:
You will need to make a down payment to purchase a house. Your down payment will be deducted from the total housing costs, while the remaining will be covered by your mortgage. Look at the average down payment costs for a house based on factors like age and location to get an idea about what you can expect to pay.
A Mortgage Loan:
You will need to be approved for a mortgage loan to finance the remainder of your house. The lender will look at factors like your income and your credit score to determine their approval. If they think you’re a riskier borrower, they may adjust the terms of the loan to mitigate that risk.
What are some terms they might include?
- Your loan could have a higher interest rate and repayment term.
- You might be required to take out mortgage insurance. Mortgage insurance offers protections for the lender, not the borrower.
- You might need a co-signer for your loan. A co-signer is someone who agrees to take on your mortgage payment if you ever default on it.
Closing costs are a series of fees that come with processing the real estate transaction, like inspection fees, attorney fees, appraisal fees and courier fees. You will also be paying for insurance and property taxes.
Typically, the closing costs range from 3% to 6% of the total mortgage loan.
What You’ll Need After Closing
You know that once you get the house, you’ll have to arrange your budget to cover expenses like mortgage payments, property taxes and utility bills. These are two other expenses you should prepare for.
An Emergency Fund:
You’ll want to have a stash of savings that you can turn to when there’s an urgent home repair, like an AC unit breakdown in a heatwave. Without those savings, you may not be able to cover the emergency repairs on your own.
In that case, how can you cover them? Without savings, you can use your credit card, or you can go to a website like CreditFresh to see whether you meet the qualifications for a loan. If you meet all of the qualifications, you could apply for a personal loan online, and if you get approved, you can use the borrowed funds to resolve your urgent repairs.
It’s not enough to have home insurance. You should sign up for disability insurance, life insurance and health insurance to make sure that you or your loved ones can maintain your mortgage payments in times of crisis.
Can your budget handle all of these essential expenses? If so, you might be ready to join the housing market.