The Hidden Costs of Buying a Home (That No One Tells You About!)

February 3, 2023/in For Buyers /by chrisandcherylpark

So, you’re finally ready to buy a home. Congrats! Homeownership is a huge milestone. But before you start packing your boxes and planning your housewarming party, there’s one important thing you need to do: figure out how much it’s actually going to cost you.

Sure, you know that you’ll need to come up with a down payment and pay closing costs. But there are also a number of other prepaid expenses that can come as a surprise to first-time homebuyers. In this blog post, we’ll break down some of the most common prepaid expenses and help you get a better understanding of what you can expect to pay when you buy a home.

Homeowners Insurance Premium

One of the most important prepaid expenses when buying a home is your homeowner’s insurance premium. Homeowners insurance protects you from financial loss in the event that your home is damaged or destroyed by fire, wind, vandalism, or another covered hazard. Most lenders require borrowers to have homeowners insurance in place before they will close on a loan.

The amount you’ll pay for your homeowner’s insurance premium will depend on a number of factors, including the value of your home, the location of your home, and the type of coverage you choose.

Specific Hazard Insurance

In addition to general homeowners insurance coverage, you may also need to purchase specific hazard insurance depending on the location of your home. For example, if you live in an area that’s prone to flooding or wildfires, your lender may require you to purchase flood or wildfire insurance.

The cost of specific hazard insurance will vary depending on the type and amount of coverage you need. However, it’s important to note that even if your lender doesn’t require you to have specific hazard insurance, it’s still a good idea to consider purchasing it. After all, it’s better to be safe than sorry!

Property Taxes

Property taxes are another common prepaid expense when buying a home—and one that can often come as a surprise to first-time buyers. Property taxes are levied by state and local governments and are used to fund public services like schools, roads, and parks.

The amount of property tax you’ll pay at closing will depend on the state and county in which your home is located, the assessed value of your property, and when you purchase the property.

Mortgage Insurance Premium

If a lender requires you to take out mortgage insurance (MI), then the premium could be included in your prepaid costs. Mortgage insurance is insurance that protects the lender in the event that you default on your loan.

Mortgage insurance is typically paid monthly as a part of your mortgage payment, but you might pay a lump sum at closing in addition to the monthly payments.

Initial Escrow Deposit

In addition to the prepaid expenses mentioned above, you’ll also need to make an initial escrow deposit at closing. This deposit is used to establish your escrow account, which is used to pay your property taxes and homeowners insurance premiums on your behalf each year.

Be Prepared

There are a lot of things to factor in when you’re buying a home. It’s not just the list price that you need to be aware of, but also the prepaid expenses. Homeowner’s insurance, mortgage insurance, and property taxes can all add up. Be sure to factor in these costs when you’re budgeting for your new home so that you don’t end up being surprised down the road.

Tips to Make a Winning Offer

January 10, 2023/in For Buyers /by chrisandcherylpark

Now that you’re financially secure and have found your dream home, you’re probably ready to take the next step toward purchasing a house. However, if you found your home in a seller’s market, there’s still one thing standing in the way: other buyers. Luckily, we’ve found various strategies that you can use in a bidding war that will help ensure you land your dream home.

Getting Pre-Approved

Your journey towards home buying doesn’t start with calling a real estate agent — it starts with getting a mortgage pre-approval from a lender. This is because pre-approval helps with two crucial steps:

Confirms your price range so you’ll know which homes you can afford
Shows home sellers that you’re serious about purchasing a home

Sellers will always prefer pre-approved buyers because this tells them that you’ll have the money when closing time comes.

Limit Contingencies

A seller won’t want their home to rot in the market and they don’t want to relist their home because a contingency resulted in the fallout of a sale. You can give a stronger offer by limiting your contingencies, which are specific conditions that must first be met before the finalization of a sale. By dropping your contingencies, you’re telling the seller that you’re able and willing to pay additional at closing if the home appraises for less than the price you agreed on.

Make a Competitive Offer

To know what a competitive offer would be, be sure to review recently sold properties with your agent to get an idea of what sellers consider is a fair price. This is because offering a lowball amount will usually backfire, and buying a house isn’t like buying at a flea market. Offering $150,000 for a house that’s worth $250,000 might come out as an insult and you probably won’t get calls after that.

Increase Earnest Money

A bigger earnest money deposit shows how serious you are with buying the property. Many sellers will feel more confident with buyers who put down a 3% deposit rather than those who put down a 1% deposit. In short, if a house costs $300,000, don’t offer a $500 deposit — this will make a seller nervous since you can easily walk away without losing much.

Include an Escalation Clause

If you’re worried about overpaying after making a higher offer on a house, an escalation clause may help you if you’re facing competition. It works by having your agent write an escalation clause if you believe that there will be competitors for the home you’re after but aren’t sure of how much they’ll offer. The escalation clause will allow you to pay a certain amount above any offer which stops at your budget limit.

Offer a Quick Close

Sellers prefer to close in as little as 30 days or less, so you can offer a 21-day time frame to give you the edge over other competitors. Furthermore, some sellers find it more important to close quickly rather than get more money from a deal. So be sure to come prepared with money on hand to ensure that you’ll be able to make the close you promised to the seller.

Let’s get started today finding your new home!

Staying on Budget When Househunting

In this market, becoming a homeowner can seem out of reach. Many properties are expensive, and interest rates keep going up. But with these steps, you can create a budget to help you find the right home!

Step 1: Add Up Your Income. Make sure to capture ALL income sources, not just the income from your full-time job.

Step 2: List Your Household Expenses. Get all the bills and expenses you usually have to pay listed in one spot. It’s not the most fun, but it’s an important step!

Step 3: Calculate Homeownership Costs. Owning a home can come with extra expenses outside of your mortgage payment, like repairs and maintenance. Be prepared for these expenses by budgeting them in.

Step 4: Give Your Budget Room to Grow. Budgets aren’t meant to be one-and-done, so give your budget a little space to grow–both on the income and expenses side.

Step 5: Make Adjustments. Take a look at your budget. Can you afford a house? If it’s a little tight, see what you can take out. If yes, then awesome! You’re ready to reach out to a real estate agent. I

f you follow these steps, you’ll develop a great budget that will put you on the path to homeownership–without busting your budget! Call us today to find your new home!

What to Ask Your Lender

December 5, 2022/in Financing, For Buyers, Real Estate Market /by chrisandcherylpark

When it comes to buying a home, there’s one person who’s just about as important as your agent: your lender! Lenders are a wealth of knowledge, so take advantage of that and make sure you ask these six questions. Getting these questions answered will ensure that you get the best mortgage with the best terms possible. Future-you will be super happy that you took the time to get all the details on mortgages while buying your home.

1-What is the best type of loan for me and why?

2- Do I qualify for any special loan programs or discounts?

3- What interest rates can you offer?

4- When can you lock in my rate?

5- What fees will I need to pay you?

6- What will my closing costs be?

What is the Ideal Size Home for Your Family?

November 2, 2022/in For Buyers /by chrisandcherylpark

How Much Square Footage Do You Need For Your Family?

When it comes time to begin your search for a new home, there are many decisions to make. While you might think you should buy the largest house you can afford, there are other considerations to make when it comes to selecting a home size. The size of your home matters in terms of resale value, maintenance, and plans for you and your family.

Physical Needs and Maintenance

Your home is your way to express yourself and your style. Consider your physical preferences when it comes to the size of your home. Do you like a small, cozy, and intimate feeling in your home? Do you have lots of stuff and need lots of room for storage? These are all individual preferences that prospective homebuyers should consider. There’s no one-size-fits-all when it comes to “the right size” home.

Average Guidelines to Consider

As mentioned above, there are several factors to consider for your unique preferences. However, as a guideline, the average family of four can comfortably live in a 2,400-square-foot home. You’ll want to leave an average of 200 to 400 square feet per person living in the home. However, that does not mean your family cannot live in a much smaller home. Older homes tend to have a more intimate and smaller feel, while newer homes are made increasingly bigger by the year.

Budgeting for the Right Size Home

Of course, you’ll have to factor in your monthly budget when it comes to choosing the right size home. First, you’ll need to consider the size of the loan you’ll need to purchase the home. More expensive homes will naturally need a larger loan. Consider your ability to get approved for this type of loan based on your family income. Of course, you’ll want to consider your ability to place a down payment on a more expensive (and larger) home.

The larger the house, the more utility expenses you can expect. Things such as electricity, landscaping, water, gas, and more, are factors you should build into your monthly budget. Smaller homes may be easier and less expensive to maintain.

Thinking about the Future

As you determine how much square footage your family needs, consider your family dynamics. Do you have a baby on the way? Do you plan on having more children down the road? Do you want this home to be your “final destination” without having to move again? These are all things families should think about, specific to their changing family units.

Ready to find your ideal home? Give us a call to get started!

Benefits of Hiring a Real Estate Agent

September 30, 2022/in For Buyers, For Sellers /by chrisandcherylpark

The real estate market is competitive and confusing, which can make it difficult to know if a professional is worth the commission they charge. Here are three reasons why it’s a no-brainer to decide to hire a real estate agent to help you sell your home, even in a seller’s market.

Agents Specialize in the Real Estate Market

Agents go to real estate school to understand how to navigate the real estate market, which means you can trust them to know and understand the nuances of the industry. As experts in selling and buying homes, real estate agents know how to maneuver negotiations to get their clients to the closing finish line. One wrong decision could mean hundreds of thousands of dollars lost or gained when it comes to purchasing a property. If you’ve never been through this process before, an expert can help explain what goes on throughout the entire transaction. Questions will no doubt arise, such as: What does escrow mean? When will it be time to close escrow? What information do I have to legally provide to buyers? You may not realize all the things sellers must disclose when they sell a house. Real estate agents are trained professionals who understand these nuances and won’t let anything slip past them during negotiations.

Real Estate Agents Have a Fiduciary Duty

Fiduciary duties are the highest duties under the law, and when you have an agent on your side, you can rest assured knowing they are bound by law to put your best interests first. There are six specific fiduciary duties that an agent must uphold.

Loyalty: The agent is at all times to act solely in the best interest of the principal, which is you, the client.

Confidentiality: They’re obligated to safeguard and keep your secrets. Disclosure: They must inform you of all relevant material when it comes to the transaction. No secrets may be kept.

Obedience: Real estate agents are obligated to obey all lawful instructions that you provide them, which means that even if they think you shouldn’t put an offer on a house if you want the contract written, they must obey.

Reasonable Care and Diligence: An agent must be dependable and willing to always pursue the best options for their client. Under this duty, agents are to use their superior skills and knowledge of the real estate industry while pursuing their principal’s affairs. Accounting: This duty compels an agent to safeguard any money, deed, or other document entrusted to them that relates to their client’s transactions or affairs.

Personalized Attention

Real estate agents work on commission, and they don’t get paid unless you successfully close on a sale. This alone makes an agent work even harder for you. As a seller, you’ll get an expert who understands what buyers are looking for in your neighborhood, a professional who knows how to stage your home based on its surroundings and potential buyers’ tastes, and someone who will know how to price your home to stand out from the others. There’s no need to be stressed out by all the paperwork and legalities that come with selling a home because you’ll have someone who can explain every part of the contract and offers that you’re receiving. Plus, agents know how to negotiate the best price for your property, which could help sell your home for more.

Before you decide to take on the challenge of selling your house on your own, I would love the opportunity to sit down and discuss your needs. Give us a call today to schedule your free, no-obligation consultation!

5 Things to Look for When House Hunting

September 21, 2022/in For Buyers /by chrisandcherylpark

House hunting can be overwhelming! It can be hard to know where to start and what to look for. So we’ve summed up our Top 5 things to look for when house hunting:

Location: Location, location, location! Once you purchase a home, you can’t change the location, so you will want to be sure that you not only love the house but the area it is located. Consider how close the home you are looking at is to your work and the noise from nearby traffic and neighbors.

Site: After you have decided that you like the home’s location, you will want to look at the site. Is it on a hill with a view? Does it have a lot of stairs to climb? Do the neighbor’s windows face your home? Make sure you thoroughly inspect the site before committing to a property.

Neighborhood: While you don’t always know the people you are moving next to, you can take stock of the area by looking at neighbors’ yards to see if they are clean, check local crime reports to see if the neighborhood is safe, and see if the area is child or pet friendly.

Floor Plan: Don’t be distracted by a home in your price range with a large floor plan if you are never going to use the space. Keep in mind that the bigger the house, the higher the energy bills, and the more expensive it is to maintain.

Kitchen: The kitchen is the most used space in any home, so make sure you don’t settle for a kitchen you don’t love. An alternative option is to look for a house under budget and plan for a remodel, but that can take a lot of time and money.

What is one thing you wish you had known about your current home before you moved in? Ready to start house hunting again? Give us a call to get started!

Are You Ready for an Investment Property?

September 10, 2022/in For Buyers, Real Estate Market /by chrisandcherylpark

Have you ever thought about buying an investment property? Investing in real estate is one of the best ways to build generational wealth, but as with most major investments, getting started can certainly be daunting in the beginning. Before purchasing your first investment property, here are a few things to consider:

-Financial situation. Are you financially stable, and can you afford the upfront costs of an investment property?

-Investment goals. Have you discussed your plans with a financial advisor? As with any investment, investing in real estate does carry some risk.

-Time commitment. Do you have the time to manage your property? Being a landlord can be time-consuming, so be sure you can dedicate the time to managing your property (or can hire someone who will).

-Pre-approval. As with any property purchase, you’ll need to go through the pre-qualification and pre-approval process with a reputable lender.

If you’re considering purchasing your first investment property, give us a call and we can discuss some options!

Know the Hidden Costs of New Construction

September 1, 2022/in For Buyers /by chrisandcherylpark

Buying new construction can seem like a good way to avoid a lot of the headaches that come with older homes. With things built to your specifications and brand new everything, you’ll pay a lot less in decor and maintenance costs. But new builds do have some hidden costs that could end up putting a big dent in your wallet.

Here’s what you need to know:

1. Understand that the model home is like the top trim package on a car–it has all of the upgrades. And those upgrades probably cost thousands of dollars. When you tour the model home, pay attention to the things that will definitely be in your house like the layout.

2. Know what’s included in the base model. Some base models come with appliances and all of your home necessities included while others come with just the bones of the house. It depends on the builder, but you need to know exactly what you’re walking into.

3. Read the warranty. Not all builder warranties are the same, and they will cover different things. Make sure you understand what will and won’t be covered so you aren’t surprised down the line.

4. Use your own agent. The agents working at the new construction are the builder’s agents–not yours. That means they work to get the builder the best deal possible, even at your expense. Protect yourself and get a fair deal by hiring your own buyer’s agent.

If you’re looking for an agent to make sure you get the best deal while buying new construction, just send give us a call! Chris 480-754-9077 & Cheryl 480-754-9477

Is it Cheaper to Rehab or Build New?

August 8, 2022/in For Buyers, Real Estate Market /by chrisandcherylpark

Many buyers are wondering if it’s cheaper to buy a fixer-upper or build a new home from scratch. If you’re in this boat too, here are some things to consider:

-If you can find a home with good bones for a good price, a fixer-upper might be just the thing for you. However, material and contractor costs are high right now, so rehabbing a house can take more cash than it used to.

-Building right now requires patience on top of cash. Because supply lines are still reduced and labor costs are rising, you have to account for extra costs and extra time needed to build, which bumps the average price of building to around $332,000. That said, building new can save you in maintenance costs since everything is new.

The best option for you depends on your location and your real estate goals. Give us a call, we are here to help! Chris 480-754-9077 & Cheryl 480-754-9477