This ARTICLE On Unexpected Home Buyers Expenses Payment Shock For Borrowers
The American Dream is still owning your own home. More millennials are getting qualified for a mortgage and are shopping for their first home. Rent prices are soaring nationwide. In some areas, a mortgage payment is less than the market rents.
VA and USDA loans allow home buyers to get 100% financing. HUD, the parent of FHA requires a 3.5% down payment on a home purchase. First-time homebuyers require a 3% down payment on conventional loans. A first-time homebuyer is defined as a buyer who did not have an interest in homeownership in the past three years. Seasoned home buyers require a 5% down payment on conventional loans. Non-QM loans require a 10% to 30% down payment. Gustan Cho Associates offers non-QM jumbo mortgages for self-employee borrowers with no income tax returns required.
Traditional jumbo loans require 720 FICO and a 25% down payment with a debt to income ratio not greater than 41%. Gustan Cho Associates has multiple traditional and non-QM jumbo loan programs. Gustan Cho Associates offers a 10% down payment jumbo loan program with credit scores as low as 660 and a debt to income ratio as high as 50%. We also offer non-QM jumbo mortgages with credit scores down to 500 FICO and no waiting period after bankruptcy and/or foreclosure.
Sellers’ concessions can be used for closing costs.
Homes have been appreciating year after year since 2012. Due to increased home prices, both HUD and the Federal Housing Finance Agency (FHFA) have increased FHA and Conventional Loan Limits for 2021. FHA Loan Limits for 2021 is $356,362. Conventional Loan Limits for 2021 is capped at $548,250.
The Department of Veterans Affairs (The VA) recently eliminated the maximum loan limit on VA Loans. There are unexpected home buyers expenses when buying a new home. In this article, we will cover and discuss Unexpected Home Buyers Expenses for new home buyers.
Costs And Unexpected Home Buyers Expenses To Consider By First Time Home Buyers
As a new homeowner, you will not have the luxury of calling your landlord for the following:
- Repairs required such as furnace/air conditioning breakdowns
- Appliance repairs
- Landscaping
- General maintenance
There will also be unexpected home buyers expenses that first-time home buyers need to be aware of. There are predictable costs such as the new mortgage. Home buyers can incur additional costs associated with homeownership such as property taxes, homeowners insurance, utilities, water bill, scavenger services, and others. Maintenance and repairs can become expensive. Things taken for granted such as landscaping and snow plowing are a new homeowner’s responsibility.
Maintenance And Repairs For New Homeowners
Maintenance And Repairs are often taken for granted if you are renting a home.
- However, maintenance and repairs are a new homeowner’s responsibility
- Reserves should be taken into consideration for every homeowner
- Repairs such as HVAC System breakdown can be costly
- A refrigerator can easily cost a few thousand dollars
- Washer and dryer repairs can cost a lot of money
- A new lawnmower can cost several thousand dollars
- Yard equipment such as garden hoses, rakes, shovels, weed trimmers, and other tools are not cheap
- Real estate experts suggest that homeowners should budget 1.5% of the home’s value every year in upkeeping their home
- Condominiums and townhomes require less maintenance than single-family homes
Annual maintenance such as annual leave cleanups, gutter cleaning, HVAC checkup, blacktop refinishing, staining decks, and paint can cost a few thousand dollars.
Property Tax Expense For Homeowners
Most homeowners have their property taxes and homeowners insurance escrowed. Property tax and insurance expense can increase depending on the county and state of the home and the type of property. Homeowners without a mortgage are still liable for property taxes.
Alex Carlucci, a senior vice president at Gustan Cho Associates and a real estate and lending industry analyst states the following:
Property taxes don’t just vary by state, and they’re not stagnant — they also increase or decrease based on city, ordinance, and even a specific house. The Tax Foundation has a property tax data lookup tool by the county you can use when planning expenses. If you believe your property taxes are higher than they should be compared with other homes in your area, you can hire a lawyer to help grieve your taxes (usually for a percentage of the money that person saves you). You can also do it yourself and save the fees. Utility costs can be as high a number as property taxes. It can run a couple hundred dollars or more. Estimates change with climate, ranging annually from $2,616 (in Atlanta, GA, for example) to $3,480 (Portland, OR). The national average is $2,964. But to get a clear sense of what to budget, ask a friend with a home in the neighborhood you’re considering to give you a peek at his or her monthly bills, making sure to adjust for the size of their home versus yours. This can also be eye-opening when it comes to lawn care, water bills, and even the local price of groceries.
Shopping For Homeowners Insurance
Mike Gracz, the National Sales Manager at Gustan Cho Associates and an expert in homeowners insurance, advice the following:
You’re best off buying a replacement cost policy which will cover the cost of replacing the items that get stolen or damaged in a fire, rather than one that gives you the depreciated value of the items lost. According to the Insurance Information Institute, the average annual premium is $1,132. But you can save yourself a significant amount by shopping around, both online and off. And ask about what discounts you can get, including discounts for security systems, working from home, and bundling coverage for your home with your auto insurance policy. Be aware of the limitations of homeowners insurance Policies tend to only protect home and possessions within, but if you’re buying a condominium, the co-op might require a liability rider for accidents on the property. And if you’re in a flood zone, you’ll need flood insurance as well.
For more information about the contents of this topic and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.
August 16, 2021 - 4 min read