Understand Lender’s Lingo
Types of Mortgages
Adjustable Rate Mortgage – a mortgage with an interest rate that will change periodically, which means that your monthly payments could go up or down. Consult with your lender to see if this type of mortgage would be right for your financial situation.
In Other Words…
APR(Annual Percentage Rate) – rate that reflects the annual cost of a loan, including the loan interest rate, PMI, points and fees.
Do Your Research
There are several ways to research the safety of an area where you are considering purchasing a new home.
You can contact the Sheriff’s office of the municipality where you are considering purchasing your new home. They should be able to provide statistics and recent crime activity near your potential home. Please be sure to call the non-emergency or administrative line and do not dial 9-1-1 for this information.
The Internet is also a tool that you can certainly use to your advantage. There are websites that allow you to view reported crimes in the areas you are searching, although the majority of them do not have the participation of every agency so you may have to find the one that does carry the information you are looking for. Try Crime Reports or Crime Mapping. Also, the Sheriff’s office website of the municipality you are searching in will most likely have crime activity disclosed online to the public.
Another website you may be interested in is the sex offender registry for Florida (check the FBI website for the website addresses of other state registries). You can put in an address, choose a radius between 1⁄4 and 5 miles, and it will give you a list of sex offenders and their address. (http://offender.fdle.state.fl.us)
Cost of Home Ownership
Down Payment – This can range from 3.5% to 20% of the purchase price, unless you plan to obtain a USDA or VA 0% down mortgage to purchase your property.
Inspections, Appraisal and Survey – All three of these items are recommended or required to be purchased for your protection. Inspection costs can range from $250 to $500, depending on the size of the home. There are also further inspections such as termite, septic, etc. that will add to the expense of an inspection. Appraisal costs can range from $350 to $500, and survey costs can range from $250 to $500, depending on the size of the property.
Closing Costs – Many buyers are unaware of what “closing costs” are – they are fees paid at the closing of a real estate transaction; typically about 2-5% of the purchase price of the home. This can obviously add thousands of dollars to your cost of homeownership. Closing Costs include charges related to obtaining a mortgage (from your lender), items that are required to be paid in advance by your lender (taxes, interest, mortgage insurance premium, hazard insurance premium, flood insurance, etc.), and title charges (settlement fee, title search, title insurance, etc.).
Moving Expenses – While you may not have the expensive task of moving across the country or even to another state, you will still most likely incur at least minimal moving expenses. If you hire movers, don’t forget about getting extra cash for a tip. If you are using family and friends, be a great host and order pizza, drinks and dessert for all of your family and friends hard work!
Mortgage Payment – A basic mortgage payment includes principal and interest.
Property Taxes –Your property tax bill is not due until November, but your lender collects money for your tax escrow account throughout the year and pays your property taxes on your behalf.
Homeowner’s Insurance – Because homeowner’s insurance covers your new home and your personal property, it generally costs more than renter’s insurance. It may also be necessary for you to purchase additional insurance for hurricanes, floods and other natural disasters because they are not covered in a general home insurance policy.
Private Mortgage Insurance – If your down payment was less than 20%, your lender will require you to have mortgage insurance and you will be required to pay Private Mortgage Insurance until your loan to value ratio reaches 80%.
Home Furnishings – Many new homeowners may want (or need) to upgrade their furniture and decor or paint their house. Save some money to put towards making your house into a home.
Homeowner’s Association Fees – HOA fees are generally put towards maintaining common areas, lawn maintenance and enforcing deed restrictions. If you are in a neighborhood with an HOA, it is usually mandatory and homeowner’s association members are charged monthly, quarterly, semi-annually or annually.
Maintenance and Repairs – “Prepare for the worst and hope for the best” is a good quote to apply here. If you have rented previously and something went wrong with one the plumbing, electricity or one of the appliances, you just had to pick up the phone and call the landlord. When you own a home, you are your own landlord. Keep up with routine maintenance to help your home maintain its value. Think about holding an emergency fund for unexpected repairs.