A home can be a great investment because unlike renting, you’ll hopefully get money back when you sell it. Some people are even able to borrow against the equity in their home when needed. But buying, building or selling a house isn’t a decision you should make lightly.
First-Time Home Buyers
If this is your first house, it’s best to have enough money saved to cover a down payment as well as closing costs, home appraisal and a home inspection.
- Down Payment: Although a down payment can range from $0 to as much as you can save, it should be 20% of the cost of the house to avoid private mortgage insurance. The remaining amount is the amount you’ll finance, so the more you can put down, the better.
- Closing Costs: Closing costs are usually around 3%-6% of the loan amount.
- Home appraisal and inspection: The cost of these vary, but on average they are $300-$600 each.
- Insurance: Once you’ve purchased your home, you’ll need homeowners insurance. If you’re building, you might consider a builders risk endorsement for the construction phase.
Because your property taxes and home insurance will probably be rolled into your payment, you should take those into consideration when calculating what that payment will be each month.
You will also incur costs to move, whether you hire professionals or rent a truck and do it yourself. In addition, houses require ongoing maintenance which will lead to additional expenses. Are you ready to put in the time, work and money this takes?
If you’re ready to make that move, it’s important to choose your home’s location wisely as that could affect your resale someday. In addition, if you’re not buying a new house, your home inspection is key. Don’t close until you have a detailed home inspection and any issues are addressed by the seller.
Selling Your Home
There may come a time when you need to move for a job relocation, to be closer to family or just to experience life in another part of the country. Another reason may be that your house needs updates and instead of enduring and investing in a remodel, you’d rather get a newer house. Whatever the reason, you’ll need to prepare your house to sell. That won’t necessarily involve a remodel, but cleaning up the landscaping and yard, and maybe even a coat of paint can improve curb appeal outside. Decluttering, a deep clean, touch-up painting or repairs may need to be done to make the inside more appealing as well. There are also home staging techniques you can use.
Buying Investment Property
If you’re buying a home to rent to others such as an apartment building, duplex or fourplex, you need apartment owners insurance. It will help cover obvious perils such as fire, wind and hail, plus some liability situations.
Whether you’re buying, selling or becoming a landlord, a home always needs insurance. If you’d like to know more about homeowners insurance or apartment owners insurance and discounts, contact me with Shelter Insurance®. I’ll be happy to answer any questions you may have.
