Financing And Budgeting Tips To Make The Home-Buying Process Easier For You

The process to buy a home is not always full of floor-plan decisions and touring through various homes. Included in the buying process are important financial and budgeting decisions to make sure that you can personally afford the home and that you are prepared for any future costs during home ownership. Here are some recommendations to help you plan for the finances and budgeting of your new home purchase.

Calculate Loan Costs

In addition to saving up for a down payment and earnest money for the home purchase, you also need to prepare for the costs associated with the mortgage and loan process. To secure financing your mortgage broker or loan officer will need to process your loan paperwork, then send it to the underwriter for their contribution. The underwriter's job is to make sure all your documentation is verifiable and that your credit, income, and employment are sufficient for the loan's requirements. For example, if you are applying for a $200,000 loan at a low market rate, your income needs to cover the payment with your employment showing steady history, and your credit needs to be a high enough score for you to qualify for the loan. 

To cover this work, you will need to pay a fee to the underwriter and a commission percentage to the mortgage broker or loan officer. These costs are usually added into the closing costs on the home, but be prepared to pay for them as part of the closing costs at the settlement and signing meeting.

Additionally, the mortgage company will require an appraisal on the home you choose to buy to make sure it is worth what they are lending you. They also may need an inspection to make sure the home meets certain regulations required by the loan program. For example, an FHA or HUD loan will require the home to have certain safety features, such as a handrail on all stairs and electrical covers over each outlet. Depending on the inspector and appraiser, you may need to pay for these services at the time they are performed, which you will need to pay for out of your pocket.

Remember Moving Costs

Another important cost that is part of the home-buying process is moving into the new place. This can include costs to buy moving materials and hire a professional moving crew or truck, and it can also include any costs to clean your old residence and your new home in addition to connecting services at your new home. Be sure to budget for these expenses so that when the dust has settled after the closing and settlement meeting, you can pay for the physical move to get into your newly purchased home.

Contact a real estate agent for help with finding houses for sale in your area.