Budgeting a House Purchase Checklist
A house purchase has a lot of moving elements, a lot of hidden costs and a logistical setup well beyond what one person can easily handle. Here is a breakdown of the moving parts of a house purchase and an understanding of budgeting a house purchase. Hopefully this checklist gives you the big picture you need.
The People Involved in a House Sale:
Here is a little list of the core players in a house sale.
- The Vendor – the person who puts the property up for sale
- The Buyer – that is you, the person who desires the home
- The Competition – other buyers putting up offers for the same home
- The Real Estate Agent – the individual fronting the deal for the vendor
- The Conveyancer – the legal oversight for the house sale
- The Broker – the financial entity giving a loan to the buyer
Get a good grip on who these people are, what their roles are and what their motivations are.
The Costs Involved in Buying a House:
- House Price – the full price of the home in question
- The Deposit Price – The level of direct investment you have to make before entering the settlement period
- The Loan – a percentage of the house price fronted by a bank
- Loan application fees – cost of applying for a large loan
- Capital Investment – the remaining cost of the home you put up directly
- LMI – lenders mortgage insurance (if the loan is greater than 80%)
- Legal/Conveyancer Fees – cost of hiring a legal entity to check over paperwork
- Stamp Duty – tax on home purchases by the government
- Building inspections – depending on your state these may be included in the settlement price or fronted directly by the buyer
- Moving costs – the cost to move from one home to another
There are other costs, but these are the main ones to consider when purchasing a home. Budgeting a house purchase can be hard, and is something that required a good amount of effort and time to do effectively.
Budgeting a House Purchase Checklist:
- Get a grip on your own finances – understand how much capital you can put up, how much LMI costs if you need, how large a loan you can get (pre-approval) and how much you are willing to spend
- Once you have looked at properties in your price range, budget out the costs – using our data above and budgeting data available across the web (this article could help)
- Access a loan – once you have budgeted and negotiated, access a loan and begin the legal processing or settling
- Move in to your new home.
Hopefully this overview gives you a broader picture of the home purchase process. If you want to know more the below articles may help.