Planning for the Financial Demands of Buying a House in Las Vegas
Planning for the financial demands of buying a house takes some strategy and awareness. Many first-time homebuyers or individuals that have been out of real estate for a while think in terms of how their rent translates to a mortgage payment. If their current rent is $1000 per month, they often consider a similar amount as the threshold for their monthly mortgage payments. But the bigger financial picture of owning a home has additional costs and potential financial benefits that need to be weighed as part of the total picture. Here are some factors to bear in mind when planning your finances around a home purchase.
One of the areas that’s essential to budget for are upfront costs. These typically fall into three areas. The first major cost is the down payment. Typically, funders demand at least 5% down. Certain programs may allow buyers to purchase with as little as 3% down. Industry experts agree, however, that 20% is ideal for financial stability and eliminating monthly fees such as private mortgage insurance. Closing costs and loan fees represent the other area, and can be anywhere from 3 – 10% of the mortgage’s total. Having these funds in order before you purchase your home helps eliminate stress and concerns.
A separate area that buyers need to consider is the monthly fees associated with their loan. Monthly costs will include the mortgage payment, taxes, and any private or government mortgage premiums. Homeowner’s insurance and any supplemental insurance policies, such as flood insurance, also need to be considered. Finally, there are monthly or seasonal maintenance costs and utilities that should to be budgeted for, unless you handle these yourself – including snow removal, landscaping, trash services, water bills, and heating/cooling costs. It’s also wise to have additional funds on hand in the case of needed repairs or other financial surprises.
The financial benefits of owning a home
Of course, it’s not all bad news when you’re planning for your home’s financial needs. While owning a home does require some capital, it yields significant financial benefits. One of the most important is building equity. Instead of paying rent to another person, you’re establishing a financial foundation that you’ll theoretically be able to cash out if you ever sell your home. Another benefit that’s less well-know are the tax benefits; many home owners are able to write off certain costs associated with closing their loan during the purchase year. Subsequently, mortgage interest can often be deducted each year. Capturing the tax benefits of home ownership varies depending on your individual tax situation. Consult an expert for more information.
Are you a Las Vegas buyer who is considering purchasing a home? Contact Sydnee Johnson today to arrange for a personalized financing consultation and to learn more about planning for the financial demands of buying a home.