Before buying a home, you need to make sure you can afford more than just a down payment and monthly check for your mortgage. Prepare yourself in advance for additional home buying costs.
Here are 7 additional costs associated with buying a home:
- Mortgage Interest. Many variables can affect this cost including your income, credit score, debt, down payment, and length of your mortgage. If you have a low credit score, you can improve it by paying on time and making more than just the minimum payment. A high credit score can help you get a lower interest rate.
- Closing Costs. These costs include appraisal fees, title insurance, property transfer taxes, and inspection fees. The total cost is usually around 2.5% of the home’s cost.
- Property Tax. This tax will vary based on your home’s value and location.
- Maintenance. You should set aside some money for maintenance in case a dishwasher breaks or to replace a fridge. Additional maintenance costs can include house cleaning and yard care.
- Private Mortgage Insurance. Depending on your loan type, you may have to pay for private mortgage insurance if you put less than a 20% down payment on your house. This cost can be as high as 1.50% of your mortgage. Put at least 20% down to avoid paying this extra cost.
- Homeowners Insurance. The cost of your homeowners insurance will differ based on where you live. If you live in an area that is prone to natural disasters, your insurance may be higher.
- Utilities. Don’t forget to include costs for electricity, gas, water, and trash.
If you are in the market to purchase a new home, we can get you pre-qualified and pre-approved, so you can shop with confidence.