What To Expect When You’re Expecting a New Home

Real estate analysts say homes have not been this affordable since 1971, and there’s no question that mortgage rates are rock bottom.

But you’ve probably also heard that today’s real estate and mortgage markets can be full of “gotchas,” endless hurdles to jump through, and unexpected twists and turns.

That’s all true, but there are also some great deals and opportunities to be had.  If you are a first-time or even a repeat buyer in the market for a new home, you can find useful tips in “What It Takes to Buy a New Home” in the June 2012 Kiplinger magazine.

The article demystifies the home-buying process and tells you what you need to know in today’s marketplace.

Here’s a short recap:

  • You’ll get the best interest rate if you have a credit score of at least 740.
  • If you put down less than 20% of the purchase price, expect to pay for private mortgage insurance, which will increase your monthly costs by 0.5% to 1.5% of the mortgage value each year.
  • Your monthly mortgage cost – including mortgage principal and interest, real estate taxes, home owner’s association dues, and insurance – should normally not exceed 28% of gross income.
  • Don’t forget to budget for closing costs, which vary by state.  Florida closing costs average about 2%, according to Bankrate.com.  (See averages by state).
  • Lenders don’t factor in the cost of maintaining a home when they look at affordability, but that doesn’t mean that you should ignore it too. To play it safe, budget at least 1% of the home’s value for annual upkeep.

Financial Tip: During our annual client reviews, we are looking at mortgage terms and costs and are still finding many clients who can benefit by refinancing.  Make sure we have information about your mortgage on file so we can conduct a cost/benefit analysis for you.

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!


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