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How Much Does It Cost To Buy A House?

"Exactly how much money would that be with closing and other cost?"

This is a question from an actual email I received this week, and it's not the first time I've addressed the question. The answer is not as simple as you might think, because it depends, it depends on a lot of things. But here goes, here's my answer, if I've been vague or left you with questions, call me. I'll answer your questions and edit this post for clarity. I have always said these things should be taught in High School, but until they are, let's work together.

How  much exactly will depend on several things, and it will largely depend on what kinds of loan you qualify for. The loan I told you about is an FHA Loan. I put a mortgage calculator on my blog, just for you, so you can play with different scenarios.  http://kdsfarm.blogspot.com/ .

Now, remember when you’re looking at this PITI. The acronym, p-i-t-i, stands for principal, which is the principal amount of the loan, the first i stands for interest, that’s what you’re going to see with a fully amortized loan, that’s the figure the calculator on my blog will give you, the principal and interest. But there’s more… the t stands for taxes, which in this case (on $114,000) is $551.00, and the second i is for insurance.


The lender will escrow – in other words collect and hold – money to pay interest, taxes, and insurance. They don’t want you to get behind, they want to start you out ahead so when you buy the house and go to closing they will hold 3 months. They'll break it down into a monthly amount… let's take the taxes: $551 divided by 12 = $46.00 which will be added to your payment. And so will your homeowner’s insurance (required on a mortgaged home). I don’t know how much that will be without calling your insurance provider or calling one for you. That's another thing that depends. I have a nice deal with Allstate because I have my cars and my homeowner’s with them. My lender, Bank of America collects the taxes and insurance from my payment and pays those bills on my behalf. You’ve heard people talk about their house payments changing? This can be because insurance and taxes fluctuate. There’s another reason a loan amount may fluctuate it's called an ARM, which stands for an adjustable rate mortgage. That’s when you get a super-duper interest rate, but the rate adjusts with prime. And right now prime is  low so ARM’s are not a good option. There’s also an interest only loan, again, that’s not a good option for an average home buyer either.

Another thing how much will depend on is how much are you going to put down on the home? If you put down the minimum to qualify assuming you paid full price for this house (and we’ll talk more about that when you hire me as your Buyer's Agent) at $114,000 the down payment would be $3,990. There’s may also be a fee, called a loan origination fee, aka points, on a bank loan.

I found this really super link to the Federal Reserve Site: http://www.federalreserve.gov/pubs/settlement/ with a Settlement Costs Worksheet! Have a look at that.

Here’s the thing, buying a home seems like an awful lot, but in an effort to cover every little thing, well, you have to cover every little thing. A real estate agent should be well versed in these things and should be able to help you make a good decision.

Have you ever heard of Truth in Lending? Each and every real estate transaction will have a HUD Statement. This breaks down the exact costs. The closing attorney, the attorney you pay to handle the transaction, he’s YOUR attorney by-the-way, he or she will prepare a closing statement, and cover it line by line to make sure you understand exactly what each cost is. Your real estate agent should cover these items, too, so there are no surprises at closing.

If your grandmother is going to give you some money for closing, that’s OK as long as it’s a gift and does not have to be repaid. Mortgage companies do not allow you to borrow your down payment. You have to have some cash on hand, to buy a house. $5 or $6,000 on a house in this price range ($100,000) will take you a long way.


Now, it's time for you to go to your bank. That's the best place to start. Call your bank and find out if they loan money for mortgages. If they don't I can send you somewhere else. Even if they do you might want to check around and see if you can get a better interest rate or a lower loan origination fee.


So, how much does it cost to buy a house? It depends, it depends, it depends.



Realtor.org - Research Commentary

Wrapping up 2011, NAR chief economist, Lawrence Yun, reports the rise of existing-home sales. Record low mortgage interest rates and lower sales prices have continued to entice buyers. Are we on our way to a sustained recovery? See Lawrence Yun in this 2011made for REALTOR TV video.

And in this YouTube video, a commentary by Yun following the unpresidented housing boom and bust "700 billion here, 800 billion there..."  Now, the mortgage interest deduction has become an issue.

Reasons People are Buying Homes Today

The second most common reason people cite for buying a home now is affordability. What's the first reason? Find out here:

Primary Reason for the Recent Home Purchase

On January 11, 2012, in Did You Know, by T.J. Doyle, Marketing & Communications Manager a blog post was added to the Economists' Outlook Blog, which follows housing stats from the National Association of Realtor's esperts.

Wind Power Talks at JLF Event

Wind Power Does Not Help Economy or Environment, Experts Say

While state law requires North Carolina utility companies to generate 7.5% of their energy using renewable resources by 2018, they don't tell you: "Electricity generated from the wind is inefficient, extremely expensive, and bad for the environment, argued scientists and economists at a forum sponsored by the John Locke Foundation Dec. 5, at the University of North Carolina-Wilmington."

Like many of the green movement's supposedly great ideas to save the planet, this one is no panacea. Wind run plants, according to the article, "cover more tnan 1,000 times the surface area of a conventional facility."

So, I'm thinking if you've got a hundred acres of pasture or so, you're not using, and you don't mind the sight and sounds of several hundred windmills, and you have deep enough pockets to build the grid, knowing it'll be several generations down the line before you get a return on your investment, one you'll never see... why you're probably a good candidate for this technology. Now, if they can figure out how to store electricity generated by wind power plants, well then, that would be another story.

Sell Low - Buy Low, Should I Make a Move Now?

My best articles come from letters to clients. This is one from "Eric" who said, "We are exploring our options and aren't sure what we should do." Here's my response:

Hi Eric,

Thanks for following up with me. It sounds like you've got some decisions to make, but nothing that can't wait a while. This market has made a lot of people unsure of what they should do. Do you live in Western Carolina?

My thought is that while it might be OK to make a lateral move right now - sell low, and buy low - moving into an altogether new situation requires a different sort of investigation. And with this market in flux... every week a different expert pops up to say: We're at the bottom! Invest your money today; we'll strike it rich. And at the same time another expert on another channel chews thoughtfully on the end of a pencil and says "Bottom? Really? Not with all of the shadow inventory. Until that clears, we're still going down. And here's our National Real-Estate-Expert, Miss Smarty Pants, to weigh in on the REAL real estate news this week." And the cameras roll.

We don't know what to believe.

My thought is that this is the time when you follow your heart. Play the theme song from Annie: The Sun will come out tomorrow, betcha' bottom dollar that tomorrow, there'll be sun...

Do what you feel is in your families best interest, for today, and for the long haul. If you can stay in your home, STAY! Make it more comfortable and stick this out. Laura Allen, a local business woman, has been selling some of her household goods online. She said she can't afford a bigger house so she's going to declutter, rearrange, redecorate and make the one she has feel bigger. Smart girl!

A lot of people have to relocate - and it comes down to this - do you HAVE to sell or can you STAY. Whatever you decide you've got some work in store, whether it's the work of putting your house on the market, or redecorating for the long haul, now is the perfect time to get started. 2012 is just around the corner.

Whether you sell or stay here are some links you might want to explore.

See: Video from the National Association of REALTORS: Inside An Energy Audit
http://link.brightcove.com/services/player/bcpid1785312249?bclid=1747275818&bctid=1726708597 

See Video from the National Association of REALTORS: The Staging Pro
http://link.brightcove.com/services/player/bcpid1785312249?bclid=1747275818&bctid=63269637001 

Merry Christmas and Happy New Year!

By the way, Eric, in writing this note I realized I've stumbled onto a good topic for my New Year's real estate column! If you see this in print....

Real Estate Syndication

Real Estate Syndication, "Distribution Trumps Destination" so says Saul Klien in this fantastic video that explains real estate syndication in a way that absolutely makes sense.

This morning as we approach the Thanksgiving Holiday I've just got to say, Thank you to Saul Klien, who has been a leader in real estate and real estate technology. I took my e-Pro certification under Saul's Internet Crusade before the National Association of REALTORS took over the class and that was one of the smartest/bravest/best things I've ever done.

Syndication Overview

View more webinars from yveszx

I specialize in a second home and land market that requires a good understanding of technology. Most of my real estate transactions are with out of area buyers and sellers. I utilize and enhance marketing and syndication of listings with tools like visual tours. I've talked with a lot of you about syndication and explained how important it is, but Saul Klein nails it.

Our MLS Board offers syndication through List Hub. United Country offers syndication through their online partners as does The Real Estate Book and since I rarely work with clients who won't participate in syndication, you can safely assume your listing is syndicated.

Now in our rural area, we occasionally get some errors, particularly mapping errors, some I can fix and some I can not. Sometimes we find off the wall examples of data feed errors, like $17,000 appearing at $1700, but, the technology is improving everyday and while I can't make changes to your listing on every little site, like "typepad" and "hothomes", I want you to understand that I am covering the bases and have accounts with the big guys.

Real Estate Syndication - made easy - watch and learn from one of the big guys, Saul Klein whom I am grateful to "follow" in RealTown.