Don’t Forget About the Extra Costs of Owning a Home

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Filed under: Market Comentary

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With mortgage rates still at a great percentage to purchase that dream home of yours, you still need to be prepared for the “true” cost of owning a home. These are specific items that you need to be aware of which will definitely put you a little more at ease versus having them hit you as a financial surprise that you may not have been expecting. Taking advantage of the low mortgage rates is certainly worthwhile; just remember to make sure you are buying what you can afford and be sure to budget for expected and unexpected expenses.

So, here are a few items to consider as you contemplate buying that dream home:

1. Inspection and Appraisal Fees

Be aware that before you buy a home, you will need to pay for a home inspection and an appraisal. These are necessary for your own protection so you will not buy a flawed property.

2. Closing Costs

You may be able to negotiate with the seller for some of these costs, but you should be prepared to pay anywhere from 2%-4% of the mortgage balance depending where you are buying your home.

3. Taxes

As a new homeowner, you will be required to pay property taxes, which usually are part of the escrow you pay each month. It is good to remember that even if you a “fixed rate” mortgage, the property taxes may go up and increase your monthly mortgage cost.

4. Homeowners Association Fees (HOA)

If you happen to purchase your home within a homeowners’ association, you will be required to pay a monthly or even quarterly fee. Remember that these fees can increase periodically or your association may need to charge a “special assessment” as needed for specific projects the association comes up with.

5. Moving Costs

Don’t forget to include your moving costs of paying a mover to move all of your belongings or deciding how much a rental truck will be.

6. Utility Bills

Your costs of electricity, gas, and water may be higher for your new area so check out each of these utilities so you know what to expect. In addition, look into the costs of garbage collection, Internet, cable, and a landline, if you choose to utilize these services.

7. Maintenance and Repairs

If you have never owned a home before, all of the maintenance and repairs will now be your responsibility. Some of these will be expected, while others will be unexpected, such as a water heater that goes out, fixing a sprinkler system, fixing or replacing your pool equipment, etc… Some financial experts suggest budgeting 1%-2% of your mortgage balance as yearly maintenance and repair fund.

As long as you are aware of the possible added costs you may have to endure, you will be in good shape.

If you have any questions about any other added costs or anything else on purchasing a home, please feel free to contact me and we can go over all of the expected expenses!

 

 

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