If you’re thinking about buying a new home, it’s essential to consider the costs involved. This includes upfront costs like a down payment, closing costs, and recurring expenses you’ll need to pay as a homeowner.
Down Payment
A down payment is an upfront amount you pay to purchase a home. This money comes from your savings or an eligible gift. Larger down payments mean smaller mortgage payments, as the lender assumes less risk. They also give you more options for mortgage loans. However, you need to weigh the cost of a large down payment against other costs and goals. If making a significant down payment would drain your savings or make it challenging to meet other monthly expenses, consider making a smaller down payment.
Property Taxes
Property taxes are one of the expenses associated with buying a home. These taxes pay for police officers, firefighters, roads, schools, and other services. The amount you owe in property taxes depends on the tax rate and your home’s assessed value. These two numbers can vary widely around the country, so doing your homework before buying is essential. You may consult experts like Your Home Wichita for more guidance about the property taxes you must pay when buying your new home.
Closing Costs
Closing costs are needed when you buy a new home. These expenses are in addition to your down payment and mortgage. Closing costs vary by lender, loan type, and local rules. But they can add up quickly. In addition to mortgage fees, closing costs may include appraisal fees and homeowner’s insurance. These can be costly, so understanding them is essential before closing your new home.
Moving Costs
The cost of moving can be overwhelming. You’ll have to pay for a truck and any hired help, and you’ll need packing supplies and a cleaning service. The cost of a move depends on many factors, from the size of your home to its distance from your old address to its new one. It can also be affected by the weather and the time of year you’re planning on moving.
HOA Fees
Homeowners Association (HOA) fees can vary significantly, depending on the type of property you’re buying and its amenities. They can range anywhere from $100 to $1,000 per month.
Before purchasing your new home, please find out the HOA’s history of fee increases and its services. Also, ask about reserve contributions and if the HOA has a history of charging special assessments for unexpected costs.
Utilities
When you buy a new home, you’re responsible for paying for electricity, gas, water, sewer, Internet, telephone, cable TV, and trash collection. The cost of these services can vary depending on where you live, but they’re essential to keeping a home comfortable and functional. It’s important to set these utilities up before you move in.
Homeowners Insurance
If you’re a first-time home buyer, it’s important to understand your homeowners’ insurance. This insurance covers the structure of your home, its contents, and personal liability. The cost of homeowners insurance depends on many factors. Your location, credit score, and risk of damage due to natural disasters all factor into your premium. Ensure you do annual “checkups” of your insurance policy to keep up with local building costs, home remodeling, and inventories of your personal belongings. These will help you understand what is and isn’t covered under your policy, which can lead to a smoother claims process.
Maintenance
Many recurring costs are associated with owning a home, including property taxes, HOA fees, utilities, and maintenance. These expenses can vary depending on your home’s age, condition, and location. You must set aside 1% of your home’s yearly value for maintenance and repairs. This will help to cushion the blow when unexpected repairs are needed.
