8 Costs to Consider Before Buying a House
Highlights
- Create and stick to a budget
- Consider factors associated with a mortgage
- Buy homeowners insurance
- Ask the seller about past utility bills and property taxes
- Start a fund for maintenance and remodeling costs
The price of homeownership is made up of recurring expenses that aren’t always obvious.
It’s a good idea to create a monthly budget and checking these eight expenses against your cash flow before you buy.
- Mortgage payments. Consider your price range and calculate the monthly mortgage payments. Your payments depend on how much you borrow, the interest rate and the amount of time you have to pay off the loan. Keep in mind, the quicker you pay down the principal, the less you pay altogether.
- Private mortgage insurance. If your down payment is less than 20% of the home’s price, the lender usually requires you to pay for private mortgage insurance (PMI) to protect the lender in case of default. Check with your mortgage servicer to see if you are able to have the PMI removed when you reach 20% equity.
- Homeowners insurance. Homeowners insurance is critical to rebuilding, repair and replacement costs in the event of a catastrophe or theft. It’s also wise to consider flood insurance, even if you don’t live in a flood zone where it’s required.
- Property taxes. Local governments charge real estate taxes to pay for public expenses, such as schools, parks and sidewalks. Ask the seller or seller’s real estate agent to share the current annual tax on a property.
- Utility bills. Ask the seller for recent records of utility bills: electricity, gas and water.
- Remodeling. You might fall in love with a house, but when you move in, you envision remodeling projects to improve the space. Make a list of what you want, prioritize the actual needs and stick to a budget.
- Maintenance. Hire a qualified home inspector to walk you through the condition of a residence before you buy. The inspector can estimate the life expectancy of major components, such as the roof, heating, plumbing and electrical.
- Miscellaneous. Whether it’s a home security system, trips to the home improvement store or mandatory homeowners association fees, there are plenty of expenses that can fall into the “other” category on your budget.
See more at…https://www.usaa.com/inet/pages/advice-home-homeownershipcosts?akredirect=true