When you begin budgeting for a house, there are multiple costs that you may not even think about as a first-time buyer. The bad news is that – buying a home isn’t just about sending rent money to the mortgage lender because there are a lot of other things to consider as well. Buyers have to remember that there are various additional costs to take into account when purchasing a home.
Hence, to help you know the multiple costs of owning a home, we have created a comprehensive guide that you should go through in its entirety.
The Additional Costs Of Buying/Owning A Home
1. The Down Payment
According to a well-known home inspector in Weymouth MA, the down payment rate will fluctuate across regions but the standard rate is 20 percent. However, you can get a loan with a lower down payment as well, but you must remember that the lower the down payment, the higher will be the monthly interest rate.
Thus, if you can pay more upfront as a down payment, the less money you have to pay later on.
2. The Closing Costs
One of the largest additional fees that most buyers face before finalizing the purchase of a house is the closing cost. Usually, closing costs are 2-5 percent of the house’s purchase price. The cost also includes inspection fees, survey fees, title insurance, and much more.
However, there are some methods that you can utilize to bring the closing costs down. It can be possible that the seller might be willing to cover some amount of the closing costs and therefore the buyer should address such a possibility during the negotiation phase. Besides, it’s also wise to look around for loans from more than one vendor because each vendor will have its different fees. It should be further known that cheaper houses tend to have lower closing costs.
3. The Home Inspection
It’s recommended to the buyers to obtain a home inspection before finally committing to the house purchase. A home inspection process will be well worth its cost and therefore could help the buyer save money later on. If any minor or major issue is discovered inside the home (due to the home inspection process), the buyer will have the right to negotiate the same with the seller. The seller can either provide a discount on the asking price or repair the issues.
Buyers also suggested opting for home inspection procedures that include checking for pests such as termites.
4. The Utilities
Buyers are requested to ask for proper information from the sellers regarding the average costs of the utility bills incurred per month before finally deciding on the purchase. This is because utility costs can continue to add up over time.
Additional Costs Once The House Is Owned
Once the buyer has taken care of all the pre-purchase costs, it’s time to include various annual & monthly fees into the budget as well. Hence, apart from mortgage payments (principal payment + interest), there are numerous ownership costs that you have to factor in:
1. Taxes & Insurance
Usually, property taxes will cost around 1.2 percent of the total price of the house every year. On the other hand, insurance premium prices will vary, based on the plan & the insurance provider.
2. Maintenance Of The Home
Once a house is owned, the buyer will be fully responsible for the repairs & upkeep. Hence, before purchasing a house, such factors should be considered. With the help of a home inspection process, buyers can easily learn how much initial maintenance is required.
And that pretty much sums up our guide. We hope you enjoyed our write-up and for any additional suggestions, contact us at any time.