Costs Associated with Buying a Home
So you want to a buy a home. This is probably one of the biggest financial decisions you will ever make in your life and you must be prepared to have enough funds for it. You should also conduct a thorough research before you step into the market. We are sure you must be aware of the basic costs involved, but in some cases, your savings must be significantly greater.
Your down payment and loan origination fee are not the only expenses that you will have to bear. There are other associated costs as well. Here are the most significant ones.
Do you have any idea how much moving can be, particular if you are moving to another state? If you do not play your cards right, moving can be expensive. The good thing is you can bring down these costs in a number of ways. For instance, do most of the packing yourself, get rid of unwanted stuff so as to decrease the weight of your belongings, choose a reputable mover that charges lower rates and so on.
Were you a renter before you bought a home? You must have paid your rent on a monthly basis all this time. Considering this, it should not be too difficult for you to set aside an amount every month for your monthly payment. These payments will repay both the principal loan amount as well as the incurred interest.
Monthly payments depend on your total loan amount, type of mortgage and interest rate. Before you get involved in the buying process, decide an amount that will be affordable for you, and accordingly, move forward with the process.
Taxes and Insurances
Renters may have a renter’s policy, but never had to pay property taxes. As a homeowner, you will need a homeowner’s insurance policy, which is different from rental coverage. Premiums for this depend on your credit score, locality, security features in your home, and a number of other factors. You will also have to pay property taxes on a monthly basis – normally included in your monthly mortgage payment.
So are your savings enough for all the above costs and the basic expenses? If so, you can finally initiate the buying process.