Costs of Homebuying
What you can expect to pay when purchasing a home:
- HomeBuyer Education is required and if you are able to take it in-person it is FREE. If you must take it on-line it costs $50 per individual who needs a certificate. Each borrower is required to have a HomeBuyer Education certificate.
- When you enter into a Purchase and Sale agreement to buy a home you will need to pay earnest money ($500 - $1,500). This needs to be in the form of a personal check and counts towards your downpayment.
- You will need to have an inspection done of the home you plan to purchase. You will pay $300 - $400 to a professional inspector on the day s/he conducts the inspection. The inspector will provide details about the condition of the home - some items either Homestead or the lender will require be addressed - in an inspection report.
- Attorney Ground Lease Review: We are working on creating a short list of local attorney's who are familiar with Homestead's groundlease agreement. For a reasonable fee these individuals will review the terms of the ground lease with you. This is soon to be a requirement of participation in our program.
- Closing costs: Discuss these with your lender. They can range from $3,000 - $8,000 and are a combination of fees associated with your loan and the transaction as well as pre-paid property taxes, insurance and interest. In some case the closing costs can be financed with the loan. Often you first mortgage payment isn't due until the first of the month following the next month after closing. Often your first two months of mortgage is paid out of closing. Again, seek clarity from your lender.
- A Down payment of 1% of the purchase price (as listed on the purchase and sale agreement) is required. The amount is roughly $3,000.
On-going costs of homeownership:
- Your mortgage payment - including the ground lease fee and any homeowner/condo association dues it should be around 1/3 of your gross monthly income and will include a payment of your loan principle, interest on your loan, property taxes and homeowner's insurance.
- A groundlease fee to Homestead of $75/month.
- Homeowner's or Condo Association Dues - if you are part of of a homeowners' association or your home is a condominium you will pay dues to take care of common elements such as landscaping, common utilities and maintenance reserves.
- Utilities - As a renter probably some of your utility costs were collected as part of your rent. As an owner, you're responsible for all the utilities including water, sewer and garbage which can be quite expensive. Be sure to understand average utility costs and budget accordingly.
- SAVING FOR MAINTENANCE AND REPAIRS - There is no landlord to call when you're a homeowner. You'll want to budget for repairs such as a new roof and maintenance items such as caulking, gutter cleaning, repainting and such. A good rule of thumb is around 1% of the "value" of your home per year. So if your home is worth $300,000 (even though you purchased it for $200,000) you should be saving (and spending when needed) around $3,000 per year.