If looking to make a real estate purchase (whether as a residence or an investment), you should make the effort to be fully aware of all the costs that might be incurred during and after your purchase. Too many prospective homeowners look only at the price tag, and end up seriously under budgeting for their purchase. While you might be able to afford the base price, purchasing a home will force you to incur many other additional costs, and you will certainly want to anticipate and plan for them. Here are a few areas that many people fail to budget for.
If you are purchasing a property, you will need to upkeep it. This is particularly important if you are going to be renting it out, but could also be important when it comes to insurance. You might find yourself on the hook for expensive repair bills before an insurance company will insure you. These might be things like electric system overhauls, roofing, or plumbing. Depending on the condition of the house and the local building codes and regulations, your initial and recurring costs will vary, but make sure you make an effort to anticipate them.
Taxes and Fees
Not only will you be facing property taxes, but you also will need to pay various fees and potentially taxes associated with the sale. Brokers fees, as well as fees for inspectors, certifications, and legal documents are all potential costs you will need to be prepared to pay. With these costs though, the best way to save money is to do them correctly the first time, as there are often penalties associated with failure to properly take care of your legal obligations.
It can drastically affect the financing that you get. If you have good credit and a strong financial history, you will likely be able to get a better rate on your loan, with less money down. Conversely, if you have poor credit, you may end up paying a lot more, both in the long run, and as a down payment.
In short, if you are looking to purchase a home, take the time to plan out all of the costs associated with the purchase. Consulting real estate and financial experts can help you get a good idea how much cash you should have in your specific situation and location before looking to make a purchase.