Purchasing a new home is one of the biggest purchases and investments that most people will ever make. While owning a home can be a great long-term investment and help you to build long-term wealth, it can also be expensive. In many cases, not all people are aware of what their total housing expenses are.
To ensure that you are prepared for the full costs of owning a home, it would be beneficial to establish a detailed housing budget first to ensure it is affordable. The following costs should all be incorporated.
The first, and largest, expense that needs to be considered when preparing a housing budget is your mortgage payment. Most homebuyers will finance at least 80% of their purchase price with a mortgage. The amount of your mortgage will vary based on the interest rate you receive, the amortization period, and whether you have to pay PMI. Any mortgage lender, such as Republic State Mortgage Co, will help you to find the right mortgage for your situation and budget.
Property taxes are a required payment in almost all areas of the country, which cost thousands of dollars per year. The amount of the property taxes you pay will vary based on where you live, the size of your lot, and the assessed value of your home. While property taxes vary from each town to the next, the state you live in can have a huge impact on the total property tax costs. While property taxes are usually only due to the county twice per year, your mortgage lender will likely require you to escrow monthly.
Since your home is such a valuable asset, you will need to ensure that you have it properly insured. Property insurance is normally a requirement of any mortgage lender and will protect you from a variety of calamities. When you are looking to buy property insurance, you should also consider a variety of factors that will help you to pick the right policy that gives you an appropriate level of coverage. Property insurance will generally be at least $100 per month.
When building a budget, home maintenance is often the most overlooked item. When you own a home, you will have routine maintenance but also need to budget for bigger expenses, such as roof, appliance, or window replacements. Most experts agree that you should save an amount equal to one percent of your home’s value each year to cover these expenses.
Buying a new home can be really expensive. However, if you take the time to plan and prepare in advance you can take a lot of stress off of your shoulders. All you have to do is take some time to do your research and start saving up as soon as possible.
About the author: Kara Masterson is a freelance writer from West Jordan, Utah, writing on behalf of Republic State Mortgage Co,. She graduated from the University of Utah and enjoys writing and spending time with her dog, Max.