Buying your first home is an exciting time yet it also can be expensive. Buying a home may be your biggest financial commitment but it also can be more expensive than you realize if you aren’t prepared for all the costs.
1. 1. Mortgage Insurance: it’s much easier these days to buy a home without a 20% down payment. As a result, more buyers have to insure the mortgage. Mortgage insurance premiums depend on how big your loan is and how little you put down. It’s important to factor in this cost into your monthly payment.
2. 2. Homeowner’s Insurance and Property Taxes: Another area that first time buyers might not factor into homeownership are property taxes and homeowner’s insurance which can add up to 2 to 3 percent to their monthly mortgage payment. Many lenders will have this money escrowed into an account and pay the amounts when they are due.
3. 3. Home-related Items: Buying a home for the first time and moving in from an apartment may leave some buyers needing to purchase more furniture, lawn tools, hoses and other outdoor items. New home buyers may also want to spend money to paint and re-decorate (new flooring, tile, etc.), purchase drapes, and fixtures to their liking. Those costs can add up quickly.
4. 4. Home Maintenance: One of the main costs that first-time buyers fail to account for is ongoing maintenance. If your HVAC system goes down or you need a new roof, you will need to pay for the repairs. If you need a plumber or electrician, you have to pay for it.
Buying a home can be a great financial investment as long as you factor in ALL costs. It’s important to plan for these costs.