If you are ready to buy a new house in Knoxville, you likely already know that it is one of the most significant purchases you will make in your lifetime and can be overwhelming! When considering the amount of money you will put into this transaction, it might be helpful to take a step back and consider it from a different perspective. This isn't just a transaction; it is a life-changing opportunity to create future memories with your family. However, you can't turn a blind eye to the financial parts of the process. You must have the big picture in mind and understand all the payments and fees you might incur. With that in mind, let's consider some of the things you will need to budget for as you prepare to buy a new house in Knoxville.
First and foremost, if you are ready to buy a new house in Knoxville, you will need to consider a downpayment. This is an area of real estate where there often needs more clarity. There is a common misconception that you will need a minimum of 20% of the property's value to put down as your deposit. However, this is not necessarily the case. Although 20% is often stated as an ideal figure for your downpayment, it is possible to put down as little as 3.5%. Working with a trusted mortgage professional who can explain the different types of loans, down payments, and even any assistance programs you may qualify for is essential. As a wholistic real estate company, Wright Realty is happy to connect you to one of our trusted advisors to ensure you are in the best possible hands as you begin your journey to buy a new house in Knoxville!
Earnest Money Deposit
Thanks to the highly competitive nature of the real estate market, you may also want to set aside something for an earnest money deposit, as this will help you stand out if a bidding war occurs! This earnest money deposit is a show of good faith to prove that you are serious about making an offer on a property. It is not an extra payment; if you make an earnest money deposit, it will be held by a third party and can then be credited to cover part of the downpayment when you go ahead with the sale. It is usually around 1-2 percent of the purchase price. If you choose to go down this route, it will likely be the first check you write as you begin buying a new home in Knoxville! As your realtor, we can discuss this option with you and help you to decide if it is something that would be beneficial to you.
You might not know about closing costs if you are a first-time buyer. Don't be alarmed - it's one thing many buyers forget about, even those who have gone through the process before. Closing costs are an upfront fee that is charged in relation to your mortgage transaction. It can cover various things, including loan origination fees, surveying, title examination, escrow deposit tax, and insurance. In short, closing costs covers the fees that are owed to the various people and service providers who may be involved in completing your real estate transaction. You can expect to pay between 3 and 5 percent of the home's final purchase price in closing costs. This can be substantial, so it is important to make sure you are budgeting for this expense, so it does not come as a surprise when you buy a new house in Knoxville.
Maintenance & Fees
Another expense you will need to budget for when you are planning to buy a new home in Tennessee is maintenance costs. If your home is within a gated community or part of a homeowner's association, then you may have a monthly or annual fee that needs to be paid. You will want to consider that when budgeting your monthly mortgage payments. It is also wise to budget for ongoing maintenance. The recommended amount is 1 to 2 percent of your home's value. Save this in a dedicated savings account to be available when you need to fix your roof or replace your kitchen cabinets. Your home maintenance fund should be separate from any emergency fund that you have. Having a property inspection will flag any potential issues the property may have. You can often negotiate a price reduction if you know you need to make repairs.
These are just a few expenses you must budget for if you plan to buy a new home in Knoxville. If you want to ensure you have planned your finances accordingly, reach out to Wright Realty. As part of our wholistic approach to real estate, we help our clients with every aspect of buying a home and will connect you with our network of trusted partners - including mortgage brokers and financial advisors.
Wright Realty is a full-service real estate concierge with a wholistic approach to buying and selling property in East Tennessee. We are your trusted advisor and keep open communication throughout your entire buying/selling process. Real Estate done "Wright" means more than just a 'transaction'.
Finding Your Property the "Wright" Way!