Market Overview

How Much It Will Cost You To Buy A House In 2017

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Experts have predicted that in 2017, the prices of houses will continue to rise in multiple markets across the U.S; unfortunately, the mortgage rate will also continue to increase.

However, despite the upward tilt of the house prices (the first raise since December 2015), the demand for housing is still amplifying.

According to economists, the housing prices nationwide will increase by around 4% this year. In Canada, the appreciation is said to reach 5.4%. However, there are said to be some states that could experience a dip, such as Los Angeles, New York, and Austin.

This 2017, around 40% of the first-time buyers will come from the Millennial group, which is our largest generation today. Their primary search is for affordable homes; however, it will continue to be a challenge due to the sheer lack of inventory. Starter homes currently cost on average around $300,000 to $400,000. Home sellers offering the price range of $300,000 and $600,000 are gaining more traction as compared to the luxury homes that are way, way more expensive. Luxury properties will continue to struggle finding buyers who can afford the steep prices asked for these homes.

The total purchase cost of a new home

Unfortunately, when calculating your affordability score, you cannot just take into account the actual purchase price of the house, you also need include the closing fees, taxes, and the inspection fees. On average, the total closing fee is between 2% and 5% of the purchase price. This includes all the extras such as the property taxes , the inspection fees, as well as the escrow costs. In other words, if you are considering purchasing a $300 000 property, then your closing costs can be up to $15 000.

Getting a Mortgage

Another challenge for house hunters is being awarded a mortgage. Though the down payments today are way lower than before, lenders are becoming stricter when qualifying borrowers. You need to have a good credit score to get your mortgage application approved. Your credit score includes your credit report. This manifests your credit history as well as your ability to pay off your loan effortlessly.

The credit score ranges between 300 and 850. The higher your credit score, the better. If your credit score is at least 740, your interest rate will be better as well. Your net mortgage rate will then be lower. Even if it’s just 1-2% lower, that already means saving thousands of dollars every year. You need to sharpen your financial education in order to plan your mortgage and home buying pursuit well. Take into account other fees that you can expect, such as the deposit cost, land registry fee, survey costs, stamp duty fees, moving fees, home insurance, council tax, leasehold costs, home design costs etc. Buying a house is definitely not the easiest endeavor. You need to be financially ready to take care of all the necessities that come along with it.

Final words

If you can afford to purchase a new home, I believe it is a worthwhile, albeit an expensive venture. There are few things in life that are as satisfying as settling into your own home where you can renovate to your heart’s content and you are not at the mercy of a landlord.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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