6 Home-Buying Budget Busters
This is an excerpt from our eBook, Manage the Mortgage Process Like a Pro. Click here to download the full version.
You’ve thought about neighborhoods, schools and even what type of home suits your tastes. Now you’re ready to start some serious home shopping. But there’s one aspect of home ownership you still need to consider—How much home can you afford?
Budgeting is perhaps the most crucial concern when buying a home. When you apply for a mortgage, you need to consider more than just the monthly payment for principal, interest and possibly PMI (Primary Mortgage Insurance). There are numerous other expenses that come with owning a home. Will you be able to afford these additional, ongoing costs of homeownership? Consider these six items to help you budget smarter:
Maintenance costs
Maintenance and repairs may cost 1–2 percent of the purchase price per year. The larger and older the home is that you’re purchasing, the higher these costs can be.
Property taxes
They vary by location but property taxes typically cost about 1 percent of the home’s value each year.
Homeowner association (HOA) fees
In condos, townhomes and planned communities, HOA fees can cost another $100 to $300 per month.
Homeowners insurance
Homeowners insurance will cost at least a few hundred dollars per year and is usually included in the monthly mortgage payment.
Flood insurance
It is required that homes in high-risk areas carry flood insurance. This policy can range anywhere from a few hundred dollars to more than a thousand dollars per year.
Utility bills
The utility bills for your new home may be different than what you’re used to. There may also be new bills that you weren’t paying previous to buying your own home. Get estimates of monthly costs for water, trash removal, natural gas, electricity, cable and internet. Some homeowners also pay for pest control, yard maintenance or pool maintenance.
How to budget for buying a home is just one of the topics covered in our new eBook, Manage the Mortgage Process Like a Pro. This eBook will walk you through the process of applying for and securing a home mortgage and take the mystery out of financing a home purchase. In just 20 minutes you’ll learn:
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How to shop for a mortgage
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Who the key players are in the mortgage process
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The role your credit score plays when applying for a mortgage
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How the mortgage application process works
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And more
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