If there was something that can make you say “wow!”, a dream house must be on top of that list. A quick look at James Harden’s 2-million-dollar Mediterranean-style home complete with two swimming pools (one for adults and one for kids) is enough for your jaws to drop. Know that the Beard’s abode is not even the classiest; another NBA star named Chris Bosh got a home that’s worth triple the amount. Or how about John Wall’s domain complete with an outdoor volleyball court and indoor basketball court. Truly, it’s easy to be lost for words gazing into all these.
The question now is how about you? Have you thought of how much your dream house will cost? Knowing how much you need to make it happen can go a long way to achieving it. Well, if you haven’t, you might as well get started today. As behavior scientists put it: Procrastination can be a hard habit to break.
Fortunately, it’s not as hard as you may think. Indeed, it all boils down to numbers. You must be able to reduce your dream into its equivalent numerals. That way getting to it would be a lot faster. Here’s how:
How much is your savings?
Right off the bat, we must distinguish between reality and vision. If you want Jame’s Harden’s home (assuming it’s listed) or any of the top NBA domains, you need to be realistic.
What we mean by that is to know how much will it take to get you there. Knowing the process of buying a dream house can certainly help you get closer to it.
First up, know that a mortgage is a must. Indeed, it’s a shot in the arm when gunning for big-budget houses. That’s why getting the services of good mortgage lenders is definitely a good start. A dependable company can give you access to tons of money via a mortgage loan that you can pay long-term. In short, it’s manageable.
But before you get into a monthly mortgage, there are certain things you need to pay upfront. And this is where you would have to factor your savings:
- Earnest money. Think of it as a vote of confidence going your way. With lots of people going after a house intending to buy it, the seller must weed out irrelevant buyers. These are buyers who are just looking around and don’t really have an intention to buy. Reason enough why you’re expected to put up money with your initial offer to buy. It’s telling the seller you are someone who’s serious about the process.
- Down payment. Apart from your mortgage, you need to pay a down payment. It’s your initial payment, usually 20% of the actual cost of the house. Know that mortgage loans will not be equivalent to the total cost of the house. So when you’re granted a loan for a house worth $100,000, the total amount given to you is a fraction of that amount, say $75,000 more or less.
- Processing costs. The price of the house is not the only cost you’ll have to contend with when buying your dream house, you’ll have to pay for a slew of processing fees, from attorney fees to title search fees. Usually, these costs can go as high as 7% of the property asking price to as low as 3%. The good news is the seller can share some of these costs.
A little math will tell you all these initial costs can amount to about one-fourth of the total price of the property. That’s a lot for you to save upon.
How much can you spend monthly?
Now, before we move forward, you must think wisely if your dream house is worth the costs. It’s a lot of expense which can choke you in your lifetime. Know that a dream house is a big expense. To weigh things here’s an expert’s take to forget it all. And settle for a cheaper house.
Then there’s the monthly expense you need to think about. How much can you afford to pay a mortgage? Just ask yourself honestly what amount is workable for you paying every month on your home loan.
To do that, list out your monthly expense. That should include your car payment, your monthly utility bills, and most importantly, your expense on the essentials. Then there are the HOA or homeowner’s association fees. And lest we forget, the insurance for the property.
How about maintenance/repair costs?
But we’re not done yet. If it is beginning to sound a lot, then know you should prepare yourself for surprise expenses. Unlike when you’re renting real estate where the landlord takes care of broken things, you’ll have to factor in possible repair costs. Quite possibly, there could be things that you want to be improved once you reside on the property. A good example is a front lawn.
Owning a dream house is a lot of work no doubt, not to mention a lot of expense. But it could be all worth the sweat. After all, this property will become home to your most precious memories.
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