You’ve fallen in love with a home in the Catskills and you’re ready to make an offer. Push pause.
In addition to helping you find a home, my job is to help you understand the costs associated with a purchase as well as the potential operating costs of maintaining a weekend home in the Catskills. This will help you know what to expect and avoid getting in over your head.
1. Down payment
While the down payment isn’t actually isn’t an additional cost, it is single largest cash outlay you’ll make in the buying process (assuming you're financing and not paying all cash, that is). Most second home purchases require a 10-20% minimum down payment. So before you make an offer, talk to your lender(s) to find out how much cash you’ll need on hand. If your down payment is below a certain amount, your lender may require private mortgage insurance or PMI which is either a one-time closing cost paid at closing or a slight increase to your total monthly mortgage payment.
2. Taxes and insurance
Most lenders will bundle the school/property taxes and homeowner’s insurance into your total monthly payment. You’ll typically pay a significant portion of these yearly payments at the time of closing which the lender will hold this portion in escrow. The amounts will depend on when the tax payments are due and how much your insurer requires to start coverage. You can find mortgage calculators on Zillow, Trulia, Realtor, among others, that will help you calculate a total payment.
Once you have an accepted offer, a home inspection is the next step. A good inspector will uncover both obvious and latent issues that may add costs to your home ownership. The inspector will provide you with a written report detailing the condition of the structure and the systems. This report will serve as a roadmap of potential future repairs. We have a number of excellent inspectors with whom we work and the cost for these inspectors typically falls between $700-$1,100.
4. Closing costs
Closing costs are the fees you’ll pay to lenders and other parties at the time of closing. These costs typically range from 2%-5% of the purchase price. Standard closing costs are:
– Mortgage Discount Points
– Bank Attorney’s Fees
– Title Insurance/Title Search/Recordation Fees
– Loan Origination Fees
– Document Preparation Fees
– Appraisal Fees
A number of these fees are charged by your lender and some lenders may require they be paid prior to closing. Your lender is required to provide an exhaustive list of these fees prior to closing.
New homeowners are frequently so excited by the prospect of buying a home that they forget to consider the significant expenses in actually maintaining the home.
- Utilities: If you’re buying an existing home, request payment information for all utilities (electric, gas, oil, etc…) and other services (cable). Remember that when you buy in the Catskills there is a period of at least 6 months where you’ll probably require a heating source and those costs can be significant depending on the age/efficiency of your heating equipment.
- Repair/Maintenance: Depending on the type/age of the home you buy, you may need to factor in costs for regular repair/maintenance of various structural elements (e.g. roof, windows, deck, etc…) and systems (e.g. heat, water, air conditioning).
- Services: Depending on the type of property you buy, you may need snowplowing and firewood delivery in the winter and lawn-mowing and gardening services in the warmer months.
Our goal throughtout the buying process is give you as complete a picture possible of the bottom line. While all of this can take a bit of the fun out of the buying process, our clients regularly thank us for helping them to be fully informed and prepared for home ownership in the Catskills.
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