Every year, millions upon millions of people sell their homes. And when that happens, millions upon millions of other people buy them. Check out this excerpt from a January 2022 press release published by the National Association of Realtors:

In 2021, existing-home sales totaled 6.12 million – an increase of 8.5% from the prior year and the highest annual level since 2006.

While you may not have purchased a home in 2021, you could find yourself in the market this year. If you do, it’s critical to take the steps necessary to ensure that you don’t overspend. One of the biggest mistakes you can make is focusing all your attention on the cost of your purchase and related mortgage payment. 

Your monthly mortgage payment may be your largest expense related to homeownership, but there are many others to take into consideration. 

1. Property Taxes

This varies depending on location, but it can quickly drive your payment north. Compare property tax rates in all of the areas you’re considering. There’s a chance that this could sway your decision. 

2. Private Mortgage Insurance

If you don’t have a minimum of 20 percent to put down on your home, you’ll find yourself paying private mortgage insurance. As a general rule of thumb — although it’ll vary by lender — private mortgage insurance costs between 0.25% and 2% of your loan balance per year.

On the plus side, once you have enough equity in your home, you can have it appraised with the hopes of eliminating this expense in the future. 

3. Home Insurance

As one of your biggest investments, you need to protect your home and everything that you keep inside it. The best way of doing so is with a comprehensive home insurance policy.

Once you find your dream home, contact your current home insurance provider — among several others — to request a rate quote. Comparing three to five insurance companies gives you peace of mind that you’re making the right decision. 

4. Maintenance

Even if you’re buying a new home, maintenance costs will come your way soon enough. This includes but is not limited to things such as:

• Roof repairs
• HVAC repairs and tune-ups
• Plumbing repairs 
• Electrical repairs
• Replacement furnace filters

While you can plan for some maintenance expenses, others will catch you by surprise. It helps to have an emergency fund to pay for anything that pops up. 

5. HOA Fees

This doesn’t apply to every homebuyer, but it’s something to check on before making a purchase. If you live in a planned development, there may be a monthly HOA fee that covers expenses such as lawn mowing, snow removal, and street maintenance.

Furthermore, if you’re buying a condo, HOA fees tend to be higher as it covers more.

Summary

Your home is likely to be one of the biggest purchases and investments you ever make. It doesn’t matter if you’re buying your first home in 2022 or simply making a move to a new home, be sure that you have a clear idea of the overall impact on your budget. You don’t want to run into any financial surprises down the road.