With mortgage interest rates near record lows and the real estate market booming, you may be on the hunt for a new home purchase this year.
But what many prospective homeowners don’t account for are the less obvious expenses that go beyond a mortgage payment. These can surprise new homebuyers and their budgets.
Here are some of the cost that you should prepare for:
1. Moving Fees
You can hire movers or do it yourself with a rental truck.
2. Closing Costs and Earnest Money
Down payments and closing costs are entirely separate. A down payment is an initial up-front payment made by a buyer. Closing costs consist of all fees associated with closing on a home, including title insurance, appraisal fees, broker fees, and interest. This cost can range between 3%-6% of the purchase price.
3. Maintenance and Home Repairs
The older the home, the higher the chances of a future home repair.
4. Homeowner’s Insurance (HOI)
This is a type of hazard insurance covering any losses to your property or liability coverage from accidents that occur on your property.
5. Private Mortgage Insurance (PMI)
Private Mortgage Insurance (PMI) is a type of mortgage insurance your lender may require you to pay. PMI applies to homebuyers who make less than the lender’s preferred 20% down payment or with any loan backed by the Federal Housing Authority (FHA).
6. Lawn Care
When switching from an apartment to a house, one of your new responsibilities may be a yard
7. Homeowners Association Fees (HOA)
Some neighborhoods have a monthly or annual homeowner’s association fee. These fees are collected and managed by the neighborhood HOA.
8. Utilities
Electricity, Water and Sewer, Gas, Internet and a lot more.
9. Property Tax
Aside from your principal mortgage payment, you will have to pay property taxes. Some lenders will roll this into your monthly mortgage payment, but it’s essential to understand this additional cost when you compute your budget.
10. Decorating
If you plan to decorate with new curtains, paint, furniture, etc., make sure to include these into your budget.
Got more buyer questions? Click here and send me a message. I'd be happy to answer your questions.