Buying a home remains a top priority for most Americans, including Reno homebuyers. Saving up for a down payment takes time, patience and discipline. But that is just the first step. First time homebuyers can sometimes be caught off guard by other expenses involved. That's why it's important to keep in mind the real cost of buying a home so you don't find yourself in a Reno home you can't afford.
Besides the down payment, Reno homebuyers will typically need to pay for a home inspection (sometimes this will be paid for by the seller, but it is usually the buyer's responsibility), an appraisal (the bank needs to know that the home is worth what they are willing to lend you to purchase it) and closing costs. Other inspections may be required depending on the age and location of the home as well as other factors (lead paint, termites, etc). It is best to discuss these costs with your REALTOR® so you're not "surprised" by the extra expenses when you go to sign your paperwork.
Private Mortgage Insurance (PMI) is another added expense for most homebuyers. This is the insurance required to be paid by the buyer if they borrow more than 80% of the cost of the home (ie, put less than 20% down). PMI is meant to protect the lending company in case you end up defaulting on your loan. As your equity builds on your Reno home, your PMI will go down. Eventually, when what you owe on your home is less than 80% of the value of your home, your PMI will no longer be necessary and can be dropped.
PMI isn't the only insurance required. All Reno homeowners must pay for homeowner's insurance as well. These rates will vary depending on the value of your home, where your home is located and the size of your home, to name but a few. Rates also vary from insurance company to insurance company. Make sure to shop around for the best rates as well as the most reliable insurance company.
Property taxes are a necessity to help fund local schools and government programs. These can be paid annually or broken up into 12 payments to include in your monthly mortgage payment for homeowner convenience. These rates vary from county to county. Check with the Washoe County Treasurer's Office to find out what the current tax rates are for your Reno property.
Some Reno homes are located within a neighborhood overseen by a Homeowner's Association (HOA). They charge an annual fee that goes towards maintaining the parks and other common public areas within the neighborhood. These fees can add as much as a few hundred dollars to your household expenses each year. Check with your REALTOR® to see if the Reno home you're interested in is located within an HOA community. They can also find out how much those fees will be.
As you can see, the downpayment is only one part of purchasing a Reno property. Knowing the real cost of buying a home can give homebuyers an honest perspective of what they can afford. Let me know when you're interested in purchasing a Reno home.
Charlene Hamilton, Certified Distressed Property Expert, Helping Reno Homeowners Avoid Foreclosure
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