If you are getting ready to be a first-time homeowner, you are likely excited and hopeful for the future. This is a big moment, and you are likely already well aware of the financial commitment that is about to become your responsibility. While you have probably budgeted carefully to plan for the new mortgage payment, you may not be prepared for some of the other, less well-known financial obligations that can come with owning a home. Read on to learn more about the hidden costs of homeownership.
Make sure that you are not caught by surprise when your home closing meeting occurs. While you will be given an estimate a few weeks ahead of time, you should not wait until then to set aside some money for the long list of costs associated with closing on a home purchase. In most cases, you should expect to spend about 2 to 5 percent of your home's purchase price at closing. That means that a home that costs $200,000 might require between $4,000 and $10,000 at closing time. These fees cover a variety of items and can vary depending on the local area. Some closing costs commonly required include:
- Lender fees
- Title insurance
- Notary and recording fees
- Interest in advance for partial months
and much more
If your new home is a single-family residence, you should budget for about 1 to 3 percent of your home's value on a yearly basis for maintenance. If you own a townhouse or a condo, that figure will likely be a lot lower since many maintenance needs will be covered by your homeowner's association. Some common home maintenance needs include:
- yard care
- gutter cleaning
- pressure washing
- heating and air conditioning checks
- maid service
- pest control
Check with your local county tax assessor's office to get an upfront estimate of what to expect in the coming year. Many times, property taxes are paid monthly with your mortgage and held in escrow until they are due.
This estimate can vary widely depending on your area, climate and more. You can contact the local electric, water and gas company and inquire about the bills for the homes in the area's previous use, in some cases.
If you are financing your home, and most people do, you must have insurance. Shop around for the best value since prices vary, and be sure to get replacement cost rather than a policy that only covers the depreciated value of your home and its contents. Be aware that flood insurance, even if you don't live in a flood zone, is a good idea and is purchased separately from regular homeowner's insurance. Hurricane coverage is a requirement in certain states as well.
Contact a company like LEGENDS REALTY for more information and assistance.