Buying your first home is an exciting event, but it also can be an expensive one. Not only is buying a home the biggest financial commitment you are likely to make in your life, it can be even more expensive than you anticipated if you aren’t prepared for all the costs. Here are four sleeper costs first-time home buyers should watch out for.
These days it’s much easier to buy a home without a 20 percent down payment than it used to be, and one of the reasons for that is mortgage insurance. Most home buyers who put down less than 20 percent will have to have the insurance. Your mortgage insurance premium depends on how big your loan is and how little you put down, but you easily could pay several hundred dollars a year in premiums, which usually is added to your monthly mortgage payment.
Homeowners insurance and property taxes
Another cost that first-time home buyers often fail to consider is property taxes and insurance, which can add 2 to 3 percent to their monthly mortgage payment. Most lenders require those amounts to be paid monthly into an escrow account, which the lender then uses to pay the amounts when they are due. A good real estate agent, such as one from EXIT Lakes Realty Premier, will explain to you what amount of mortgage payment to expect, including all extras such as taxes and insurance.
If you are buying a home for the first time and moving there from an apartment, it’s likely that you don’t have many of the tools and furnishings you need for a home. For example, you probably will have to buy a lawnmower, lawn tools, hoses and other outdoors items. You also may need to buy more furnishings to fill out your larger home.
One of the main costs that first-time home buyers fail to account for is ongoing maintenance. When you live in an apartment, most maintenance tasks are taken care of by the landlord, but when you own your own home, they are your responsibility. If you need to call a plumber or electrician, you have to pay for it. If your house needs to be painted or needs a new roof, you will have to shell out the costs.
Buying a home can be a smart financial investment, but to make the most of it, you must factor in all the costs of ownership.
About the Author: Lizzie Weakley is a freelance writer from Columbus, Ohio. She went to college at The Ohio State University where she studied communications. In her free time, she enjoys the outdoors and long walks in the park with her 3-year-old husky Snowball. The information in this article is credited to EXIT Lakes Realty Premier.