A home is more than a financial investment, but if you have made the decision to buy your first home, here are a few costs you will need to prepare for. Home expenses can have an impact depending on the budget that you set for purchasing your home. It is important to determine what these expenses are before you decide on a property. It is also important to think about your financial goals. A new home doesn’t just mean a monthly payment. Think about the costs that will impact your finances and work these costs into the affordability of the home you are looking at.
EARNEST MONEY
This is an upfront deposit that gets applied to your down payment or closing costs.
- Typically 1-2% of sales price – the amount of earnest money is negotiable and varies with the value of the property.
DOWN PAYMENT
Your down payment can vary depending on available programs to you. It is the difference between your mortgage amount and the purchase price of your home.
- Most loans today require a down payment between 3% to 20%.
Closing Costs
Closing fees include things like the attorney’s fees, survey fees, and document preparation fees.
- Typically, closing costs will range between 3% and 6% of the purchase price.
PROPERTY TAX
This depends on the state you reside in.
INSURANCE
Depending on your loan program and down payment, you may pay mortgage insurance. Homeowner’s insurance is also required.
MAINTENANCE, APPLIANCES, AND FURNISHINGS
It is recommended that homeowners put aside money to cover maintenance ranging from lawn equipment to household tools. When budgeting for your new home, remember to set money aside for any appliances or furniture you’ll want to purchase upon closing.
Additional things to consider include:
- Utilities
- Water and trash service
- outdoor upkeep
- emergencies
