Expenses to Keep in Mind When Buying Your First Home
Buying Your First Home
If you’re planning on buying your first home, you need to be aware of the many costs that come with homeownership.
It’s easy to get caught up in the excitement of finding and purchasing a home, but failing to understand all the associated expenses can lead to serious financial problems down the road.
To ensure that you’re prepared for this important investment, here are some key expenses to remember when buying your first home.
Down Payment
One of the biggest expenses associated with buying your first home is coming up with a down payment.
This is typically a percentage of the total price of the home and will vary depending on whether you opt for a fixed-rate or adjustable-rate mortgage.
Generally speaking, if you can put down more than 20% of the total cost upfront, then you won’t have to worry about private mortgage insurance (PMI).
However, if you’re unable to put down 20%, then PMI will be required as an additional expense.
Closing Costs
Closing costs are another expense that come along with buying a house.
These include miscellaneous fees such as appraisal fees, title search fees, attorney fees, and other administrative costs associated with processing your mortgage loan application and closing on your new home.
Depending on where you live and how much your loan amount is, these costs can range from 3 – 6% of the total purchase amount.
Homeowner’s Insurance
Once you own a home, it’s important that you protect it by getting home insurance. This type of policy covers damages caused by fires, theft and other disasters.
It also provides liability coverage in case someone gets injured while at your property or if their property becomes damaged due to something occurring on your property.
The cost of homeowner’s insurance will vary based on things like size and location of your house, so it’s important to shop around for quotes in order to get a good deal.
Buying your first home is an exciting experience but it’s important not to let yourself get carried away by all the possibilities without understanding all of the associated expenses involved in homeownership.
Down payments and closing costs are two major expenses that should be taken into account when budgeting for new house purchases; also, remember that homeowner’s insurance should be considered an essential component when determining whether or not you can afford such a big investment.
By keeping all these factors in mind before taking this big step in life, you’ll be able set yourself up for success now—and later!
Category: Housing
