Tag Archives: Homeownership

Prepare For The Unforeseen Expenses Of Homeownership

Unforeseen Expenses Of Homeownership

Being a homeowner has been your dream since you were a kid and you finally accomplished it.

Then, moving day comes. Once all the boxes are unloaded, and the furniture is shoved roughly into the right rooms, you grab a coffee and take a breather. And that is when it dawns on you. This is only just the beginning.

As a new homeowner, there are whole lists of things you need to take care of, and almost all of them cost money.

So, if you are planning to buy a new home, have just signed the paperwork, or are moving in next week, this list is for you. And if you know someone who is moving in, be a friend and give them a heads-up as well.

Property Tax – Up to $10,000: When it comes to property tax, a lot of people get sticker shock a year after they move into a new construction. The reason for this is simple; the taxes are based on the empty lot the home was built on says, Local Records Office. But a year later, the assessors come around and put a new valuation on the lot, which now has a beautiful home sitting on it. You can also face much higher taxes based on the particular school district you live in. And of course, taxes vary greatly by state. The average property taxes paid in New Jersey are almost $7,500, as opposed to $1,500 in Colorado, as of 2017.

Major Appliances – Up to $10,000: New home builds usually include a dishwasher, microwave, and stove, with the option of a fridge/freezer, washer, and dryer. They are basic unless you opt for the upgrades in your contract, but if you do, they could add a chunk to your monthly mortgage payment. If you buy a used home, you may not have any appliances included.

HOA Fees – Up to $700 a Month: Many new homes come with a Home Owners Association, and most used homes have HOAs as well. In theory, they’re a sound idea. They are there to keep the neighborhood looking great, and deal with trash collection, playgrounds, community pools, street lighting, common areas, snow removal, and so on. A typical HOA can run $100 a month. Some are just a few hundred a year, while in the higher-end neighborhoods, you may not see much change out of $1,000 every month.

Insurance – Up to $2,000 Annually: There are a few different types of insurance you need to have when buying a home. First, you must have homeowner’s insurance. The average cost of this is around $700 annually, but this varies by state. You should also have contents insurance, based on the value of your possessions. You could, of course, skip this payment. But if tragedy does strike, you could lose everything.

Utilities – Up to $400 Monthly: Again, if you live in a mansion that figure will be greater. And in a new one-bedroom apartment, much less. But on average, when moving into a new home, you will see utility bills in the hundreds of dollars. This can be quite a shock, especially if you were formerly in a small apartment or even living with your parents.

Repairs and Maintenance – Unknown: One of the biggest unknown expenses of owning a home is the repairs and maintenance costs that can hit you out of nowhere. If you were formerly renting, that was all taken care of. Now it is all on you. If the hot water heater goes out, you pay. If the roof leaks, you pay. If strong winds blow your fence down, you pay.
Yes, being a homeowner is the American dream, but it does not always come cheap. There are a lot of hidden fees and expenses. If you make a plan to cover these expenditures, then you will be a well-prepared homeowner.  ***

House hunting and credit: What you need to know

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(BPT) – By now it is something of a cliche to call homeownership the American dream. But even if sitting on your own deck, looking over your picket fence and sipping lemonade doesn’t move you, homeownership is still one of the best ways to build wealth.

For many, owning a home is cheaper than renting and, in the long run, the biggest investment they will ever make. It is also a practical financial move thanks to the fact that you’re likely building equity while getting a mortgage interest tax break.

So although it is perfectly fine to dream about backyard barbecues and the smell of fresh-cut grass, the path to owning your own home should also involve taking the time to do some financial sightseeing.

As a leader in creating credit scoring models, VantageScore Solutions has made it a priority to educate consumers on the important role a good credit history plays in buying a home.

Whether you’re about to set out to buy your first home or if you are getting ready to sell and buy another home, here are the basics of how credit impacts the home-buying process.

Basics

If you are like most people, you will probably need to take out a loan. If you are able to pay cash for your home instead, count yourself among the lucky few!

A huge part of taking out a loan involves your credit history and credit score. Basically, you must prove to lenders that you can be a responsible borrower and can be trusted with a mortgage of many thousands of dollars. A strong credit score may provide proof of this trustworthiness.

Different types of loans have different credit requirements. Some loans require you to have a credit score of at least 620, although it is possible (with some difficulty) to be approved for a loan with a credit score as low as 580. But getting loan approval is only part of the story.

Better credit, better rate

Home loans come in all shapes and sizes. Some are fixed interest mortgages, some have adjustable rates or longer terms and the list of variables goes on. Just like anything else, some loans are better for you than others. To get the loan that has the lowest interest rate, which right now is around 4 percent, usually requires a higher credit score. Rates can be considerably higher when you have a lower credit score, and the result is paying significantly more monthly over the life of the loan.

The reason is that a higher credit score demonstrates that you are skilled at managing debt and have a history of responsibly paying back many types of loans. Therefore, the lender is taking on less risk when lending you money. The less risk for them, the better the interest rate for you.

While there are, of course, more nuances to the process, your credit score plays an instrumental role in determining the type of loan you may qualify for. Therefore, before you go to your first open house, check your credit score to better understand the factors that typically impact your scores. Many websites provide free access to your VantageScore, which is a perfectly fine barometer to use to directionally gauge your creditworthiness. Mortgage lenders use FICO scores in their underwriting.

You can stay on top of things by subscribing to the monthly credit scoring newsletter, The Score. In The Score, you can find information on VantageScore 4.0, the fourth-generation scoring model that will be available to consumers in early 2018.

Knowing your credit history and understanding the factors that could impact your credit score will help you plan, budget and come up with a realistic wish list for your house.

Profile of Home Buyers and Sellers

Presentation: 2014 Profile of Home Buyers and Sellers