Buying a home at any point in a person’s life can be overwhelming and intimidating. There are so many things to consider. Are the schools nearby rated well? How is the neighborhood? How far is the commute to work? Can you afford the mortgage payments and maintenance of the home?
We are in the process of trying to buy our third home, and it feels no less intimidating than the first one. The upside is we know what to expect and the costs associated with buying a home and moving.
Ideally, it is recommended that home buyers put 20 percent down when buying a home. Why is this? First, it puts you in a better financial position and makes it easier to qualify for a loan. Second, it helps you to avoid private mortgage insurance. Private mortgage insurance is something you must pay for to protect a lender in the event that you foreclose on your home. If you do not foresee foreclosure, the monthly insurance is making someone else richer and less money in your pocket.
Closing costs must be considered. While a seller is responsible for paying the commission of realtors, a buyer must bring cash to the closing table to pay for all sorts of fees. The fees vary, but some are standard including closing attorney costs, real estate taxes, inspections and more. Homes that are a part of a homeowners association often require an upfront initiation or transfer fee that will add to closing costs for a buyer.
A down payment, mortgage payment and closing costs are not the only costs associated with buying a home. It is important to factor in moving costs which can range from very little to expensive depending on how much you decide to do yourself versus hiring movers. New homeowners are often surprised by the amount of expenses they encounter when they move into a new home. Because it is a new living space, it needs to be expected that there will be a desire to purchase items that will fit that space. In addition, a home often requires yard maintenance and some repairs. There are connection fees for utilities, cable and internet to expect.
In conclusion, when buying a home, set aside additional funds for other costs. Home ownership can be a significant financial asset or it can be a burden if adequate funds are not reserved prior to buying.
Writer Bio: Summer Bolte
I spend most of my time and days with my three kids, husband and dog. My kids frequently play near me as I garden, cook, DIY and volunteer. My most unusual paying job has to be feeding fruit flies in a research lab, and my most fulfilling job was being an oncology nurse for seven years.