Savvy home buyers understand that purchasing a home costs significantly more than the final offer a seller accepts. If you are a first time home buyer, you might be tempted to stretch your budget to its limits in order to obtain the house of your dreams. However, this decision can set you on a path leading to a mortgage payment that you might struggle to afford.
Leaving a sizable buffer between what you can afford for a home and what you pay for a home is a wise home-buying strategy. Added on top of the price of the home are the closing costs, attorney's fees, and lender's fees. Approximately 3-5% of the purchase price is added for closing costs and lender's fees, which can include loan application and credit report fees, property appraisal costs, loan origination fee, title services, title insurance, prorated interest fees, private mortgage insurance, property taxes, and homeowner's insurance. All of these additional fees will increase the amount you must pay each month for your mortgage. While you might be comfortable with a higher mortgage payment than you had initially planned, there are other reasons to buy on the lower end of your budget.
Owning a home means being financially responsible for home maintenance expenses and repairs. The average homeowner spends 1-5% of their home's value per year on maintenance and repair costs. If you choose a mortgage payment that does not leave room in your budget for these expenses, your home value will steadily decrease due to the lack of funds required to maintain your home. Yet, much more disconcerting than a plummeting home value is defaulting on your mortgage. If your financial security is impacted by a change in income and you do not plan for the unexpected, you can risk losing your home.
Mount Pleasant Real Estate Experts
At the Keadle Real Estate Group, we believe that buying a home should be a pleasant experience that lasts long after you receive your first mortgage payment. Purchasing a home on the lower end of your budget isn't simply a smart decision, it's a necessity that we understand. Schedule a consultation appointment today with the Charleston South Carolina real estate experts of Keadle Real Estate Group by calling (800) 804-2187. Don't forget to check out our Charleston Real Estate Guide!