When looking for a new house, the price list may be the first thing that catches your eye. But the price of the house is far from the only thing you need to pay for. In fact, you need to be ready to pay at least $15,000 more.
Here are 7 main expenses your need to expect when buying a home.
1. Down payment
The first expansion when buying a new house is a down payment. The amount of money you can spend for a down payment can affect your future expenses significantly. If your down payment is higher than 20 percent of the price of the house, you can get better mortgage rates and avoid paying private mortgage insurance. The 20 percent down payment means that you have to pay $20,000 for every $100,000 of the home’s price.
Of course, there is no requirement to make a 20 percent down payment, but this allows you to save some money upfront. Some conventional mortgage programs offer down payments as low as 3 percent.
2. Closing costs
Expenses on closing costs can be as much as 2 percent to 5 percent of the purchase price. The actual amount you need to pay will depend on the location of your home, its price, and the real estate market. The closing costs usually include third-party fees, origination fees, title search fees, credit report fees, underwriting fees, and title insurance.
In case if you lack money to pay closing costs, let your lender know about it. Some of them offer no-closing-cost options and can include this price into the overall loan. But this can cost you more in the long run.
3. Mortgage payment
Monthly mortgage payments are one of the most obvious expenses when buying a home. You can use special mortgage calculators to determine how much you will need to pay each month. Your mortgage rate has a big impact on your monthly mortgage payment. When buying a home, it is important to check several lenders to find one with the best mortgage rates. Failing to compare the lenders can increase your expenses significantly.
4. Property taxes
The amount of money you need to spend on property taxes differs from state to state. Your real estate agent will provide you with information about how much you need to pay annually for the home you’re purchasing. The average property tax for a one-family home is about $3,500. Keep in mind, that this isn’t a fixed cost. Your local governments can adjust taxes, so your bill may increase over time.
5. Home insurance
How much you need to pay for home insurance depends on the location of your home, state, the home’s condition, and personal factors like your annual income. But the average cost ranges between $100 – $200 per square foot. Home insurance usually covers the repairs from disasters, theft, and vandalism. In most cases, the insurance can be added to your mortgage payments.
6. HOA fees
HOA is an organization that makes and enforces rules for the properties and their residents. If you purchase a home within an HOA’s jurisdiction, you automatically become a member and have to pay HOA fees. HOA is often responsible for maintaining the area like landscaping or upkeep for the community pool or gym if you have one. The HOA fees can range depending on our location. However, the average price is about $200-$300 for a year. If you have troubles with HOA fees, you can contact HOA accounting services Sarasota to get qualified support.
7. Maintenance and utilities
When buying a home, it is important to consider utilities like electricity, water, gas, and the internet. You also need to remember about possible maintenance items, like landscaping, snow removal, trash, and recycling. These costs need to be considered because they can be significant. Neglecting these expenses can cause gaps in your monthly budget.