Whether you are searching for your first home to buy or your ninth, ensure you consider the entire cost of owning a particular home, for much of home ownership expenses extend beyond your mortgage installments.
Interest rates for home mortgages fluctuate a great deal, and they change often daily. The terms of your mortgage contract include your loan’s interest rates, but the rate at which you start is often not the rate you’ll pay in 90 days or more. Know time limits, fluctuation percentages, penalties and payment periods before you sign any paperwork, including an intention to buy.
For example, an advertised interest rate for mortgages can be for another age or income group, but it’s legal advertising, for it does apply to a specific group.
The buyer’s age can impact interest rates as well. There may not be a specific age delineation, but younger people don’t often have decades of good credit histories accumulated. The longer your good credit extends, the lower your interest rates might be.
Be aware of when or under what conditions interest rates might change. Some mortgage loan agreements call for automatic adjustments annually, semi-annually or even quarterly. Some contracts might escalate your permanent or current interest rate with every late payment received.
Even if you believe you understand every word of an intention to buy or a mortgage contract, never hesitate to seek a second, uninvolved and unbiased opinion from an expert. For example, if the property is listed by someone else’s real estate agent, don’t blindly accept his or her word that it’s fair or “to industry standards.”
Take the document to a property attorney or solicitor and have the contract reviewed thoroughly. It’s far better to pay a one-off legal fee for the document review than it is to pay thousands extra for “creative phrasing” within the contract that trips your finances onto its ear later.
In many tax jurisdictions, that legal fee might be tax-deductible as well.
Someone has to pay the closing company its costs to ensure the transaction is legal. Know who pays that, and whenever possible, have the other party remit payment. Not all will agree, but it can reduce your overall purchase costs.
Especially if you will reside there, don’t sign any purchase-related paperwork until you conduct an “other expense” investigation.
You know the mortgage payment, but what about utility bills? You haven’t lived in that house before: Discover specifically from each utility company what the highest and lowest bills – not the average bill for the last two years at least. The number five, for instance, is the average of four and six, but it’s also the average of zero and 10 – a huge difference in highs and lows.
— How much is home owner’s insurance for the property? What policies include the grounds? What about additional structures?
— How much are repair costs for high-value portions of the house? — How old is the house, for the older it is, the more age-related faults might exist?
— Can you purchase an independent assessor for the property? The service cost might also be tax deductible, so don’t be afraid to consider a completely independent evaluation of the property’s true value.
When and only when you are completely satisfied with all financial aspects of buying a particular property, don’t forget to compute furnishings, account deposits and a maintenance fund in addition to the down payment and installment amounts.
When the scale is tipped in your favor, celebrate purchasing the house that fits your needs, wants and budgetary concerns.
Article written by Edinburgh property developers who love to share their knowledge and advice.