You may be looking to buy a new house this year, with mortgage interest rates approaching record lows and the real estate market growth.
The less evident expenses that go beyond a mortgage payment are something that many prospective homeowners overlook. New homebuyers and their finances may be surprised by these.
Here are some of the costs that you should prepare for:
1. Moving Fees
You can hire movers or rent a truck and do it yourself.
2. Closing Costs and Earnest Money
There is a distinction between down payments and closing costs. A down payment is a payment made in advance by a buyer. Closing costs comprise all fees associated with purchasing a home, such as a title insurance, appraisal fees, broker fees, and interest. This fee can be anything between 3% and 6% of the overall purchase price.
3. Maintenance and Home Repairs
The older a home is, the more likely it is to require future repairs.
4. Homeowner’s Insurance (HOI)
This is a sort of hazard insurance that covers any property damages or liability coverage resulting from incidents on your property.
5. Private Mortgage Insurance (PMI)
PMI is a sort of mortgage insurance that your lender may force you to pay. PMI is required for homeowners who put less than the lender's desired 20% down payment or for loans sponsored by the Federal Housing Administration (FHA).
6. Lawn Care
One of your new obligations when moving from an apartment to a house may be a yard.
7. Homeowners Association Fees (HOA)
A monthly or annual homeowner's association fee is charged in some neighborhoods. The neighborhood HOA collects and manages these fees.
8. Utilities
Electricity, water and sewer, gas, Internet, and many other services are available.
9. Property Tax
You will have to pay property taxes in addition to your regular mortgage payment. Some lenders will include this in your monthly mortgage payment, but it's important to factor this in when planning your budget.
10. Decorating
If you want to decorate with new curtains, paint, furniture, or other items, make sure you budget for them.
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