If anyone has learned anything from the housing crisis of the last couple years, it should be “Buy an affordable home.”  So what’s affordable?  The cheapest house in town?  Not necessarily.  You want a home that is appropriate for where you are in your life.  An affordable home is one that fits your income, your lifestyle, and your needs right now.  Statistically, it is extremely unlikely that your first home will be the last home you buy.  This means that an affordable home is one where with your current resources you will be comfortably able to make your down payment, plan for your monthly costs, and maintain your basic lifestyle.  You might be willing to “tighten your belt” for a few months till you adjust to the new expenses, but you do not want to have to take a vow of poverty when signing your mortgage documents.

Once you’ve made the decision to buy your first home, your thoughts naturally go to all the great things you’ll do to improve it, decorate it, and make it your own.  While you’re dreaming, cost is no object, so you see that plasma TV, the new furniture you’ve been wanting, the trendy window treatments, the multilevel deck.  The reality is that before you order the plasma, you need to realistically assess the cash you’ll need to have on hand to get started in your new home.  When you move into a home, especially if you are coming from an apartment, there are many unglamorous costs that you need to figure in to make the place functional. 

What are some of these other one-time costs that need to be factored into an “affordable home?”

• Appraisal fees - this part of the loan approval process can run $300- 500
• Professional home inspection - $200 – 500 for a basic inspection, more for specialty inspections for structural engineering, mold, termites, or septic tank issues
• Extra closing costs – an extra couple hundred dollars can be added on at the last minute for miscellaneous fees or prorations
• Repairs, upgrades, renovations – repainting the kitchen can wait but fixing a leaky roof can’t.  In some cases, repair costs can be wrapped into your new mortgage loan.
• Moving fees – whether you are hiring professional movers or renting a truck and recruiting friends you pay in pizza, the costs add up
• Termination fees on current services – if you can’t transfer your cell, internet, or cable service to your new home, you may need to pay early termination fees or pay deposits on new services
• Appliances – if appliances aren’t included or the previous owner doesn’t want to sell, you will need to acquire major appliances
• Lawn care equipment – a lawnmower or at least some basic tools for outside upkeep, even if you plan on hiring a lawn care service
• Household items – the plasma TV may have to wait as you acquire trash cans, extra lamps, curtain rods, and towel bars
• Contingency fund – when you’re a new homeowner, some unexpected cost always comes up.  (This is not scientific, but ask any homeowner – it’s the truth.)

Keep in mind that things are usually more expensive than your estimate on paper.  People tend  to be optimistic when they write them down and  underestimate the true costs.

At Bandy Homes, we will not only lead you to your affordable Denver home, but show you how the $8,000 first time homebuyer’s credit can work to your advantage in offsetting the costs of being a new Denver homeowner. We can also explain the various first time buyer assistance programs available through Colorado and local government offices.

Marianne Bandy

Denver Colorado Homes and Real Estate