First-Time Home Buyers – Know Your Costs

First time home buyers can get educated

By Brian U on Flickr

By Brian U on Flickr CC BY-NC-ND 2.0

Many first time home buyers are faced with the fact that they may not be able to afford a newly constructed home, so they look at resales.

Although many resale homes are immaculately maintained, some resale homes are not maintained properly and need immediate attention.

Whether it is a new roof, new ac unit, or electric upgrade these projects are costly. Be sure to have your home inspector educate you on the costs involved with repairing and maintaining these items so you know what you are getting into before you get the keys.  The inspector or your Realtor (R) can even recommend contractors to give you estimates.

FHA Loans

FHA will allow for the new homeowner to take out a 203K rehab loan to help pay for repairs. The new buyer can borrow more than the purchase price to do the repairs as long as the home appraisal says they house is worth it. Be careful though, this could be costly since most interest rates on these loans will be higher.

http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm

EX: If the house needs a new roof and it appraises at $100,000 as-is but the appraiser says it would be worth $105,000 with the new roof the 203K loan would be based on a home value of $105,000.

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