Home loans, don’t pay for extras you don’t need.

Home loans, don’t pay for extras you don’t need.
Buying a home might seem like a pretty straightforward operation. You check what price range you can afford. You choose a house that fits your requirements as closely as possible.
Then you find the financing, get approved and start moving in. Ok, we might have oversimplified it a little but it is true that most of us although acknowledging that it is a big deal to buy a house we feel the basics are pretty simple to follow. And of course, they should be. However anyone that has bought a home understands that although it does not always have to be a painful operation it can be a treacherous road with plenty of surprises on the way. The articles on this website aim to simplify and forewarn some of these surprises, especially in the mortgage financing side of things. This article will focus on the “little” and not so little “extras” that so often crop along the path to home ownership.
The purpose will be two fold. Firstly, to help you avoid the unnecessary expenses that are thrown at you and secondly to point the necessary expenses you need to budget for before buying a home.

What is the price of a house?
Whatever the buyer is willing to pay, might be a good answer. What the seller decides is quite correct also. But they are just starting points. Buying a house also includes valuation fees, property tax, home insurance, mortgage setup fees, estate agent fees and the list goes on and on. As we mentioned above some are unavoidable. Unless you want to risk criminal charges, property tax is an unfortunate constant in the home pricing equation. Most estate agents will actually suggest you budget 10% of the price of the house on top of the “sale” price to cover for what are often conveyance expenses. Ten per cent is a significant chunk of the price of a house. It is especially important if our savings are minimal and we are already struggling to find a 20% down payment. Many people take on another loan to make up the difference between their savings and the 20% down payment. It is important to take extra conveyance expenses into consideration when deciding how much to borrow with your second loan.
Extras you don’t need.
However there are extras you simply don’t need. An infamous example is P.M.I’s, private mortgage insurance. We are not for one second saying insurance is not necessary. It is a wise choice to protect your most valuable asset. However Private Mortgage Insurance is an insurance that covers the mortgage lender not the borrower. In many countries it is obligatory by law to have private mortgage insurance if your down payment is below 20%. You can avoid this by, as we mentioned before, getting a second mortgage that covers your gap to the 20% down payment. You can also refinance the loan with another company that will sweeten the deal by foregoing the insurance.