The process of becoming a homeowner is exciting for first-time buyers. With this excitement, however, comes responsibility. There are many costs associated with homeownership, like home maintenance and homeowner’s insurance. So what is the key to managing these new expenses? Prior to buying, determine how much you will need to budget for you new home. As you review your expenses, don’t forget to include these 4 costs in your home buying budget.
- An inspection prior to closing: After you make an offer on a property, it’s always a good idea to get an inspection of the home. Although this may cost a couple hundred dollars to obtain, this could save you thousands in the long-run. It not only ensures that the home is in good condition, but in most cases also shifts any responsibility to fix these problems to the home seller.
- Costs owed at closing: In addition to the standard expenses of credit report, appraisal, and title insurance transactions, there are several other costs owed at closing. For example, borrowers can expect to pay two types of prepaids: homeowners’ insurance and escrow deposits. Homeowners’ insurance covers any possible damage to your home, so the first premium is typically paid at closing. Your mortgage lender will also likely collect up to three months of taxes and insurance when you close. See more about costs owed at closing here.
- Moving costs: How much it costs to move will depend on the distance you are traveling and how much furniture and personal items you will be moving to your new home. While this expense may seem obvious to a repeat homebuyer, most first-time buyers actually forget to include this cost in their home buying budget.
- New homeowner costs: When you move into a new house, you will need to set up various utilities, like water and cable. Most providers require a deposit or set-up fee in order to do this. In addition to these new homeowner costs, it’s important to begin saving for emergency maintenance costs. You will no longer have a landlord to cover these expenses, so if a pipe breaks, for example, you will need to hire a plumber to fix it.
Of course, this is only a brief list of expenses that home buyers commonly forget when creating their home buying budget. To review an entire checklist of expenses to include in your budget, download our new eBook Transitioning Into Homeownership: How to Plan for the New Expenses. If you’d like to learn more about home financing in general, contact one of our mortgage specialists today.