Budgeting is an important task in many areas, and one of the single most vital is among those who are looking to buy a home. As one of the most significant purchases you'll likely make in your life, buying a home takes some serious preparation in terms of budgeting and finances -- but you have professionals on your side during this process, too.
At The Albright Team, we're here to assist you with numerous parts of the process of buying a home, condo or townhome in Las Vegas. From locating ideal homes in the area you desire to assistance with budgeting and many related themes, we're here with you every step of the way. In this two-part blog series, we'll run through all the important areas you should be budgeting for -- from your mortgage to several others.
The first and most significant expense you should be budgeting for is your mortgage. But there are a few different types of mortgages, and each come with their own set of pros and cons.
If you're looking to stay in your home for a long period of time, you'll likely want to go with a fixed-rate mortgage. With this type of mortgage, your interest rate will be locked in for the entirety of the loan, giving you peace of mind and stability regarding your budget.
Alternatively, an adjustable-rate mortgage (ARM) could be a good option if you anticipate needing to move or sell your home before the end of the loan term. With an ARM, your interest rate will be lower at the start of the loan but could increase over time -- which means your monthly mortgage payments could also rise.
The other most notable expense you'll need to save for is your down payment. The average down payment on a home in the U.S. is around 10 percent, but this number will differ depending on the type of mortgage you choose.
For example, if you go with a conventional loan, you'll likely need to put down 20 percent of the home's purchase price. But if you opt for an FHA loan, you may be able to put down as little as 3.5 percent.
Of course, the more money you can put down upfront, the lower your mortgage payments will be each month -- so it's important to save as much as possible for your down payment.
Another mortgage-related expense to budget for are closing costs, which are the fees associated with finalizing and issuing your loan. These costs can add up quickly, so it's important to be prepared.
On average, closing costs total around 2 to 5 percent of the home's purchase price -- so on a $200,000 home, you could be looking at $4,000 to $10,000 in closing costs.
In part two of our series, we'll look at some ongoing costs that may also be a piece of this puzzle. For more on this, or to learn about any of our real estate listings or other realtor services for Las Vegas clients, speak to The Albright Team today.
Kelly Albright is Broker/Owner of Vision Realty Group and has been in Real Estate for 17 years. She has closed over 700 homes in Las Vegas, North Las Vegas, and Henderson.