One question I get asked quite a bit is, what should I expect for out-of-pocket expenses and monthly payment? How do I ultimately budget for a property when I’m looking to purchase for the first time?
So in this video, I’m gonna break down what really goes into that. In my experience, if you don’t have a thorough understanding of what goes into out-of-pocket expenses, how much money you actually have to bring to the closing table or what goes into your monthly payment that could end up costing you thousands of dollars or hundreds of dollars a month on your monthly payment. I wanna make sure that people have a clear understanding of what to expect around those things. So when I talk to people about budgeting, one of the first things I’ll ask is, what are you looking at for an ultimate down payment? What sort of financing options are available to you?
And there are many different financing options available to home buyers. I tell people there are seven basic elements. Different banks offer different rates, different terms, different programs. Actually, right now in my career, I’ve not seen as many low down payment or financial assistance programs available to buyers as I have today. So if you are looking to purchase, or you think maybe the down payment is something that’s holding you back, please do reach out to me, ’cause there are many programs that are available. And I’m sure that there’s probably something out there that would work out for you as well. But ultimately, when it comes down to figuring out the out-pocket-expenses, a couple things are going to have to be worked out right away.
First off, what are we looking at for financing program? How much money are you looking to put down? And then what can we negotiate in the purchase agreement that could ultimately help you offset some of those costs? There are things called closing costs. What we call sellers contributions to buyers closing costs, while not always available to home buyers in negotiations, depending on the situation, there are many situations where the seller is willing to pay or at least tack on the closing costs that you would have to bring to the closing table so you can ultimately pay those things. If you don’t know what closing costs are, just very briefly, they are pretty much the costs that you have to pay to actually finance and close on the property.
The recording fees, loan origination fees, different things that are involved in the financing. And many times we can include that in the loan as well. But again, that’s going to ultimately depend on what we can work out in the contract, right? The next big element on that is going to be your monthly payment. If you’re not familiar with escrow accounts, our escrow accounts are gonna be a combination of your property taxes, homeowners insurance and mortgage insurance, if you have it. There are many times additional things that might be included in that as well. But I want you to understand that just looking online, sometimes they’ll make an estimate of what they think the interest rate is going to be.
And if you are watching this in 2022, like we’re in right now, interest rates have been pretty volatile in the last six months. So if they’re making an assumption on what the rate is, you wanna make sure that that’s actually going to be accurate and realistic with what’s actually happening in the marketplace, if that makes sense, right? From there, a lot of people think it’s just principal and interest, but there’s other elements that go into that as well. So I want people to be mindful of what that ultimate payment’s gonna be. As far as ultimately coming to a real budget on what that property is going to be monthly, that’s going to be something that’s going to have to be involved in your personal finances as well and trying to figure those things out. But ultimately, I want people to really focus on two big numbers when they’re purchasing a property.
One is going to be their out-of-pocket expenses. And number two is going to be their monthly payment. If you wanna know more about what goes into those things, please reach out to me directly. I’ll include a link down below. You can learn a little bit more about me and my process. I am in a hurry to serve and I super look forward to hopefully working with you down the road.