Are you in the market for a new home? Have you set a budget? Are you ready to follow your budget to ensure that you don’t bite off more than you can chew?
It’s good that you want to take a financially responsible approach to buying a home. However, there’s something you need to remember: the sales price is just the start.
At first, you’ll focus all your attention on deciding how much home you can afford. By setting a budget, you’re able to narrow down your search to ensure that you’re only visiting properties that suit your finances.
But here’s where the problem comes into play. You can get so caught up in the sales price that you overlook other expenses associated with buying and owning a home.
Consider the following:
- Closing costs: Typically, the more you pay for your home the higher your closing costs will be. Consult with your lender for a basic idea of how much this will set you back. You must take this into consideration.
- Down payment: This is money you need to bring to the closing table. For instance, if you’re buying a $100,000 home and want to put down 20 percent, you need $20,000 for your down payment.
- Taxes and insurance: Spread out over the term of your mortgage, the purchase price of your home may not look too bad on a monthly payment basis. But you also need to factor in taxes and insurance. This will quickly increase your payment.
- Pre-closing expenses: For example, a home inspection generally costs between $500 and $1,000. You could forgo an inspection to save money, but doing so is a big risk. You want to know if there’s anything wrong with the property before you sign on the dotted line.
- Upgrades, maintenance, and repairs: From day one, you’ll find that owning a home comes with many maintenance and repair costs. And that doesn’t even take into consideration any upgrades you want to make, such as remodeling your kitchen and/or bathrooms.
When you plan for these additional costs, it’s easier to make an informed decision as to which home is right for you and your budget.
There’s no denying the fact that buying a home is an expensive endeavor. And that’s particularly true when you take into consideration everything in addition to the sales price.
Before you do anything, review your budget with each and every expense in mind. This will provide you with the knowledge you need.
Are you in the market for a new home? Do you know how much you can afford? Have you considered all the expenses associated with buying and owning a home?