A $200,000 home costs more than a $185,000 home, right? Well, yes and no. Assuming the same type of financing for both homes, the $200,000 home does cost more initially. But many factors contribute to the overall long-term cost of a house. Here are some things to keep in mind when trying to determine the true cost of purchasing a particular home:

• Does it have a pool or hot tub that requires maintenance?
• How much yard maintenance is required and who will perform it?
• Are there trees that should be removed?
• What are the utility costs? Although your usage won’t be exactly the same as the current owners, you may be able to get their utility bills for the past year from them or directly from the utility company.
• How soon will the roof need to be replaced?
• Does the house need repainting?
• Does the electrical system need upgrading to handle the load for your appliances and electronics?
• Does the home have aluminum wiring, lead-based paint, or other safety or health hazards you will want to address?
• Does the house need new carpeting or flooring?
• What remodeling projects do you see as a must?
• Will appliances need replacing?
• What are the estimated property taxes for the property?

Also, be sure to get a professional inspection to identify other potentially costly problem areas.

2004 by the Texas Association of Realtors, All rights reserved.

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1. Develop a Family Budget – Instead of budgeting what you’d like to spend, use receipts to create a budget for what you actually spent over the last six months. One advantage of this approach is that it factors in unexpected expenses, such as car repairs, illnesses, etc., as well as predictable costs such as rent.
2. Reduce your debt – Generally speaking, lenders look for a total debt load of no more than 36% of income. Since this figure includes your mortgage, which typically ranges between 25% and 28% of income, you need to get the rest of installment debt – car loans, student loans, and revolving balances on credit cards – down to between 8% and 10% of your total income.
3. Get a handle on expenses – You probably know how much you spend on rent and utilities, but little expenses add up. Try writing down everything you spend for one month. You’ll probably see some great ways to save.
4. Increase your income – It may be necessary to take on a second, part-time job to get your income at a high-enough level to qualify for the home you want.
5. Save for a down payment – Although it’s possible to get a mortgage with only 5% down – or even less in some cases – you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 20% down payment.
6. Create a house fund – Don’t just plan on saving whatever’s left toward a down payment. Instead decide on a certain amount a month you want to save, then put it away as you pay your monthly bills.
7. Keep your job – While you don’t need to be in the same job forever to qualify, having a job for less than two years may mean you have to pay a higher interest rate.
8. Establish a good credit history – Get a credit card and make payments by the due date. Do the same for all your other bills. Pay off the entire balance promptly.

Reprinted from REALTOR Magazine Online by permission of the National Association of Realtors, Copyriht 2005, All rights reserved.

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The lender must disclose a good faith estimate of all settlement costs. A check to cover your closing costs will probably have to be a cashier’s check. The title company or other entity conducting the closing will tell you the required amount for:

• Downpayment
• Loan origination fees
• Points, or loan discount fees, you pay to receive a lower interest rate
• Appraisal fee
• Credit report
• Private mortgage insurance premiums
• Insurance escrow for homeowners insurance, if being paid as part of the mortgage and insurance in escrow accounts as they are paid with the mortgage , then pay the insurance or taxes for you.
• Deed recording fees
• Title insurance policy premiums
• Survey
• Inspection fees – building inspection, termites, etc.
• Notary fees
• Prorations for your share of costs, such as utility bills and property taxes

A note about Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved out. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end of the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.

Reprinted from REALTOR Magazine Online by permission of the National Association of Realtors, Copyriht 2005, All rights reserved.

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Increase your chances of getting your dream house instead of losing it to another buyer, with these easy steps.

1.  Get prequalified for a mortgage.  You’ll be able to make a firm commitment to buy and make your offer more desirable to the seller.

2.  Stay in close touch with your real estate sales associate to find out first about new listings that come on the market.  And be ready to go see a house as soon as it goes on the market.

3.  Scout out new listings yourself.  Look at Internet sites, newspaper ads, and drive by the neighborhood frequently.  Maybe you’ll see a brand-new “for sale” sign before anyone else.

4.  Be ready to make a decision.  Spend lots of time in advance deciding what you must have so you won’t be unsure when you have the chance to make an offer.

5.  Bid competitively.  You may not want to start out offering the absolute highest price you can afford, but don’t try to go too low to get a deal.  In a tight market, you’ll lose out.

6.  Keep contingencies to a minimum.  Restrcitions such as needing to sell your home before you move or wanting to delay the closing until a certain date can make your offer unappealing.  In a tight market, you’ll probably be able to sell your house rapidly.  Or talk to your lender about getting a bridge loan to cover both mortgages for a short period.

7.  Don’t get caught in a buying frenzy.  Just because there’s competition doesn’t mean you should just buy anything.  And even though you want to make your offer attractive, don’t neglect inspections that help ensure that your house is sound.

Reprinted from REALTOR Magazine Online by permission of the National Association of REALTORS.  Copyright 2005.  All rights reserved.  http://www.REALTOR.org/realtormag.

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Most home buyers want to get moved into their new home right away, but if it’s in need of repairs or paint  it’s much easier to do that before you move your furniture in.  If you are going to renovate, make sure you allow enough time to get through the project before you are in need of moving in.  Cleaning or replacing carpet should also be done prior to furniture delivery.  Be sure to arrange your utilities to be transferred into your name and out of the sellers name on the day of closing to avoid set up and connection charges.  Some services that often get overlooked are alarm companies and internet carriers.  Check with your MUD District or water company to find out when your trash pick up will be each week.  Don’t forget to notify the post office of your new address.  If you will have a cluster mailbox, be sure to ask them which box fits your key.

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