8 Expenses to Expect With Your Home Purchase
Buying a home can be expensive, but the sticker price often doesn’t even begin to cover the other expenses. Most people don’t know the full range of the expenses you need to have to reasonably cover a full home purchase. Here are the 8 most common expenses to expect when you purchase a home:
The first expense you will incur for your home is the down payment. You’ll want to put down 20% of the home’s purchase price for the best interest rate, but you can put down as low as 3.5% with an FHA Loan.
After you put forth the down payment, you will have a monthly expense known as a mortgage payment. A mortgage payment is getting you closer and closer to having full ownership over your home each month.
Closing costs are completely dependent on the lender with whom you choose to work. You’ll probably end up spending a few thousand dollars; these costs will be due when you sign your closing loan documents.
When you make certain payments, you will have to place them into an escrow account. The escrow company will usually charge a transaction processing fee that could range anywhere from a few hundred to a few thousand dollars.
Private Mortgage Insurance
If you put forth less than 20% of a down payment, you will have to pay private mortgage insurance for the lifetime of the loan. This price will completely depend on your home’s purchase price.
Most lenders will require that you have a homeowner’s insurance policy on your home until the mortgage is paid off. Costs for this vary greatly depending on your insurance carrier and home cost.
Every year, you’ll have to pay property taxes on your new home. These costs will vary depending on the city, state and county you live in.
If you want to make sure your home stays in optimal condition, you should plan to put forth 1% of your home’s purchase price every year towards home maintenance. This step is easy to forget, but it makes a huge difference in maintaining your property.