For those about to make the happy move towards owning their own home, it would be surprising if you have not already considered the more obvious financial issues, such as making the mortgage payment and paying property taxes each month. Beyond those expenses, though, are several other just as important obligations that you need to know about. Your monthly house payment is only the beginning, so read on and take note of these other financial matters that could foil your home buying hopes if you are not prepared for them.
You will find out, sooner or later, that you will need to put aside a certain amount of money to pay for closing costs. This is not just a suggestion; the lender will verify whether or not you actually have sufficient funds in your bank account before any loan funds are released, so your closing could be canceled and postponed if you fail to secure those funds. You won't need to guess about it, however, you will know several weeks ahead of time the exact amount needed. You should plan on setting aside approximately 2-5 percent of the selling price of the home you are buying. For example, if the home is being sold for $200,000, you can expect the closing costs be anywhere from $4,000 to $10,000. The amounts will vary greatly depending on your local area and how much you have been able to negotiate for the seller to pay. Commonly, costs are made up of:
- Lending fees
- Notary fees
- Recording fees
- Title insurance
- Interest for partial months
The days of calling the landlord when your dishwasher stops working are behind you, and it pays to set aside some money to handle those emergency repairs and replacements. HGTV advises that you set aside from 1 to 3 percent of your home's value to deal with problems that crop up as well as regularly scheduled maintenance. Other considerations are:
- Lawn care (mowing, edging, etc)
- Maid service
- Pest control service and termite inspections and bonds
- Yearly air conditioning and heating check ups
- Painting or pressure washing
- Gutter cleaning
Prices can vary quite a bit depending on the carrier, so be sure to shop around for the best deal. Be aware of the difference between replacement cost and depreciated value. A replacement cost policy may cost more, but if the worst happens it will be far easier to rebuild your home. Flood insurance is a separate policy, sold by the federal government and is cheap enough to be a good idea no matter where you live. If you live in certain coastal states, you must buy a hurricane policy to supplement your regular homeowner's insurance.
For more information, contact a company such as Berkshire Hathaway HomeServices Fox & Roach Realtors.