6 Expenses to Plan for When Preparing to Buy a Home
Admin • Mar 27, 2020
If you're planning to buy a house soon, you know that you need to start saving up for a down payment. But did you know that you'll also need funds for a variety of other costs related to the purchase and for the responsibilities of home ownership?
Here are a few categories to consider as you plan how much you'll save up and how much you'll borrow to finance your first home.
1. Home Inspection Costs
You should always plan to pay for a home inspection during the home buying process. Although it is an expense, the inspection gives you the chance to negotiate and have the seller pay for needed repairs. You may need more specialized inspections, too, depending on the house and any state regulations.
In some cases, your home inspector may suggest that you should contact an expert for a more in-depth inspection of a specific home system (such as the roof, the HVAC system, the foundation, or the plumbing). You can also schedule and pay for any of these specialized inspections of your own volition if you have any concerns about the systems in question.
2. Moving Costs
Even if you buy a house in the same town where you already live, you'll need to factor in costs for moving out of your old house and into your new house. Even if you're currently a renter and don't have to sell your current house, you'll still need to budget for things like:
- Packing materials
- A moving truck
- Professional renters and packing professionals
- Move-out cleaning supplies (or professional cleaning)
And don't forget that in some cases, especially if you move across country, the cost of a big move can include things like being out of work for a while. Whether that's a week-long vacation or a few months between jobs, you'll need to have plenty saved up for groceries and other essentials if you want to avoid stressing about money during the move.
3. Mortgage and Homeowners Insurance
Homeowners insurance is a must, since without insurance your enormous investment in your home will be relatively unprotected. In addition, when you obtain a mortgage, your bank may even require you to get insurance for your home. After all, as your lender, they're invested in the home as well and want to make sure it's protected.
And don't forget about mortgage insurance. Although not all mortgages require it, some lending programs (such as those with extremely low down payments) may require you to have mortgage insurance, which adds another amount to your mortgage payment each month.
4. Homeowners Association Membership
Many subdivisions have a required homeowners association membership that you'll be expected to pay. In some cases, these payments can be relatively low, but in other cases they could constitute hundreds of dollars per month starting as soon as you buy the house.
5. Maintenance
As soon as you finish buying your new home, you'll be responsible for any future maintenance and repairs (excluding any repairs that you previously negotiated to have the seller pay for). This means that you'll need to have money budgeted for maintenance items you may not have paid for as a renter.
Aim to save up 4 percent
of the approximate home value for this purpose just to be sure you'll have enough to spend on repairs and maintenance each year.
6. Property Taxes
Once you're a property owner, you'll have to pay property taxes to the government as well, on top of your other taxes such as income tax. Property taxes are often included within a monthly mortgage payment, so they're an extra expense but not a separate bill.
These are just a few expenses you'll likely have to field before, during, and after closing on a home. Not every expense will apply to everyone. But knowing as much as possible about the likely expenses will help you develop a realistic plan.
If you're looking for a great lender to provide a mortgage for your first home, get in touch with Secure One Capital Corporation
today.
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