Part II for first timers-cost of owing a home
This is a continuation from an earlier post on purchasing a home. So you have an idea of the area of town you want to live in, you have checked your credit and you look good, but wait...how much money do you have for a down payment and closing costs?
FHA loans require a minimum of 3.5% of the asking price for a down payment. A conventional loan would require anywhere from 20-25% as a downpayment. Check with a Lender, but you figure an additional 5-6% of sales price would cover your closing costs. Don''t forget to add in maybe a refirgerator, washer and dryer, lawn mower or money to pay a service. The cost of connecting the utilities. You'll also need to budget for Home Owners Association fees which can be due annually or monthly depending on whether you buy a house or a condo/townhouse. Now you understand why it takes a long term financial plan as well as good credit to own a home. You will probably want to start a reserve fund for those unexpected expenses. Whew! It can be scary but so can looking at the cost of renting for years and at the end owning only rental receipts.
There are programs, in Texas, based on income limits or restrictions on where you buy that maybe availabe and yes your parents can gift you. Maybe even borrow from your 401K.
Not everyone can buy a home or should buy but for those who do, there is nothing like the feel of those keys in your hand after closing. When you open the door to your home, you can decorate however you like, no more moving after the rent goes up so high, haivng a backyard and getting a pet.... Oh wait, sorry about that, that was my dream.