You’ve fallen in love with a place in the Catskills and you’re ready to make an offer. Push pause.
My job as a broker goes beyond helping you find the perfect place. With all my clients, I lay out the unexpected costs associated with purchasing a home as well as the ongoing costs of maintaining a home. It’s information that is critical to a buyer and, in the end, it makes the buying process a lot smoother.
Below are five costs to consider before you pull the trigger on making that offer:
1. Down payment
While the down payment isn’t actually an additional fee, it is one of the largest cash outlays you’ll make early in the buying process. Most second home purchases require a 10-20% minimum down payment. So before you make an offer, talk to your lender(s) to find out how much cash you’ll need on hand. If your down payment is below a certain amount, your lender may require private mortgage insurance or PMI which is either a one-time closing cost paid at closing or a slight increase to your total monthly mortgage payment.
2. Taxes and insurance
Most lenders will bundle the payment of school/property taxes and homeowner’s insurance into your total monthly payment. You’ll typically pay a significant portion of these yearly payments at the time of closing. Usually the lender will hold this portion in escrow. The amounts will depend on when the tax payments are due and how much your insurer requires to start coverage. You can find mortgage calculators on Zillow, Trulia, Realtor, among others, that will help you calculate a total payment.
A home inspection is required prior to the final approval of a mortgage. A good inspector will uncover both obvious and latent issues that may add costs to your home ownership. The inspector will provide you with a lengthy written report detailing the condition of the both the exterior and interior of the structure as well as the internal systems. This report will also serve as a roadmap of potential future repairs to be done. We have a number of excellent inspectors with whom we work and the cost for these inspectors typically falls between $700-$1,000.
4. Closing costs
Closing costs are the fees you’ll pay to lenders and other interested parties at the time of closing. These costs typically range from 2%-5% of the purchase price. Standard closing costs are:
– Mortgage Discount Points
– Attorney’s Fees
– Title Insurance/Title Search/Recordation Fees
– Loan Origination Fees
– Document Preparation Fees
– Appraisal Fees
A number of these fees are charged by your lender and some lenders may require them prior to the closing. Your lender is required to provide an exhaustive list of these fees prior to closing.
New homeowners are frequently so excited by the prospect of buying a home that they forget to consider the significant expenses in actually maintaining the home.
– Utilities: If you’re buying an existing home, request payment information for all utilities (electric, gas, oil, etc…) and other services (cable). Remember that when you buy in the Catskills there is a period of at least 6 months where you’ll probably require a heating source and those costs can run high depending on the age/efficiency of your heating equipment.
– Repair/Maintenance: Depending on the type/age of the home you buy, you may need to factor in costs for regular repair/maintenance of various structural elements (e.g. roof, windows, deck, etc…) and systems (e.g. heat, water, air conditioning). We regularly walk our buyers through the various costs they’re likely to encounter.
– Services: Think snowplowing, lawn-mowing, gardening, firewood delivery, etc.
Our goal in helping a client buy a home is to give them as complete a picture possible of the bottom line. While all of this can take a bit of the fun out of the buying process, our clients regularly thank us for helping them to be fully informed and prepared for home ownership in the Catskills.
Should you want to have an initial discussion about buying Catskills real estate, please email us at firstname.lastname@example.org or call us at 917-597-7474.