Learning About Luxury Real Estate

When you start shopping around for your first home, it can be easy to get excited and throw all common sense out the window. As soon as you spot the perfect place from a site like http://sgcityrealestate.com/ complete with that cream-colored kitchen granite you are after, you might forget all about your budget. Unfortunately, making a few bad decisions when you choose a house might create a few money problems later. Here are two common financial mistakes that you should avoid making, and why you will be better off if you do.

1: Hurrying Into a Mortgage

Buying a home is one of the biggest decisions that you will ever make, but these days it is easy to feel rushed into taking the plunge. Friends and family members might remind you of the importance of a low interest rate, and many lending institutions are more than willing to finance almost 100% of your mortgage. Instead of carefully saving a down payment, you might decide to hurry into a mortgage with whatever you have in your short-term savings account.

Although moving quickly might help you to score a record-breaking interest rate, you might spend any money that you save on something called mortgage insurance. This insurance policy is required anytime a buyer has less than 20% saved, and it protects the bank or credit union if you fail to make your monthly mortgage payment. Unfortunately, these policies tend to be pricy, ranging from about 0.3-1.15% of your original home loan, split into monthly payments each year.

To put those numbers into perspective, if you purchase a $300,000 home and put down $10,000, you might end up paying between $72.50 and $277.91 each month in addition to your monthly mortgage payment. Unfortunately, you don't get this money back, and it isn't applied to your home.

If you want to keep your monthly costs as low as possible, make an effort to save your 20%. Since mortgage insurance rates are based on your down payment and credit score, the more that you have saved, the less you will end up paying.

2: Forgetting About Other Costs

Unfortunately, that down payment isn't the only expense you will encounter during your first home purchase. Many people forget about other costs, which can make their real estate transaction a little more painful. Here are a few other things that you should save for before you start shopping:

• Home Inspection: If you want to avoid buying a house with lots of problems, chances are that you will probably want to hire a home inspector. These professionals will go through your potential investment with a fine-tooth comb, and create a valuable report that you can use during your home negotiations. However, a visit from a home inspector usually costs between $200-$500.
• Closing Costs: You should also be prepared to pay closing costs, which are generally between 2-5% of your loan total. Using the same financial example as earlier, that $290,000 mortgage might mean that you would pay between $5,800 and $14,500 to do the paperwork for your new home.  
• Repairs: You will also want to have a little bit of money set aside to make repairs after you move into your new place. Because most people don't have the luxury of trying out the air conditioner or dishwasher before they move in, it might be nice to have money already set aside for a faulty appliance.
• Utility Hook Ups: After you get the house of your dreams, you also have to pay to set up all of your new services. Save some money to start up your cable, phone, and Internet service, so that you can spread the word about your upcoming housewarming party.  

It might take a lot of patience to save money for everything you will need after you get into a house, but a little pre-planning might simplify your first real estate experience and make things a lot less stressful.