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Some states, such as Georgia, require an attorney to be present at closing. If you use a lawyer, expect to cover the costs, which vary by area and lawyer. Knowing what you’re paying for when you’re buying a home—like these 10 costs of buying a hom e—can ease that check-writing pain. Sure, this part might seem the most intimidating, but with a thoughtful strategy in place, it’s easier than you think.
As the homeowner, you are on the hook for all repairs and regular maintenance. For example, you’d have to pay to fix the water heater or HVAC if either stopped working. You may have paid a portion of your utilities when you rented a space. Your landlord might also have agreed to take care of a few monthly bills on your behalf.
Transportation and Car Insurance
In addition, there may be HOA dues, and many buyers find they need more furniture or other upgrades. The first year of homeownership can get costly, so make a budget and stick to it. Please keep in mind third parties may use a different credit score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
That might involve choosing a home with a lower purchase price to make sure that your budget can comfortably support added expenses. It’s worth mentioning again that if you have less than 20% down on a conventional home loan, mortgage insurance will be an added expense to your monthly payment. But instead of protecting your home against loss, it protects the lender in case you default on the loan.
Get a real estate agent
When you were renting, you probably never thought about the landscaping of your apartment complex. These fees can range anywhere from $50 to $800 depending on the association and location. There could be more documentation required, so work with your agent and lawyer. Be sure to make copies of all important documents and keep them somewhere safe. You can talk the price down more easily, especially if the appraisal or inspection results warrant a lower price.
Part of that payment will go toward your principal balance and part will be used to pay insurance to your lender. Once your children are of school age, you may need to account for private-school tuition. But even if you send your children to public school, you’ll need money for various fees, school supplies, and occasional school trips. Adding room in your monthly expense tracker for school and childcare expenses is key to a successful and realistic budget. Everyone has to eat — and U.S. households spent an average of $692 on monthly groceries and eating out in 2021. Given 2022 inflation rates of about 8%, you can expect that number today to be closer to $750.
Retirement
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In most places, your city or county government requires you to pay property taxes on your home for as long as you own it. Typically, property tax is included in your monthly mortgage payment, but separate from the interest and principal. Calculate your monthly costs of owning a home including property taxes, insurance, and HOA fees using our mortgage calculator. It’s important to mention that there are some things that basic homeowners policies don’t cover, such as floods.
Building and Property Maintenance
We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act. You should be prepared to change all the locks on your house when you move in since you can’t be sure who might have a key. You’ll also be responsible for maintaining your detectors and replacing the batteries every six months. Buying a home in a major metropolitan area will always cost more than buying a home in a rural area. To learn more about what you need to know when it comes to buying a house, check out our First-Time Homebuyer Resource hub.
However, let’s take the median home price in Florida, which was $237,000 as of late 2019. Using that figure, your down payment could range from $7,110 at the low end to $47,400 at the high end. The dream of homeownership is one that many of our Addition Financial members share.
Your property tax payments will go up if the value of your home increases for any reason. For example, a major home renovation will likely increase the amount of your annual property tax. Many municipalities and counties offer protection against sharp tax increases with homeowner’s exemptions. Check into the availability of that in your area and make sure you take advantage of any savings. Escrow accounts are common for loans with less than a 20% down payment and mandatory for FHA loans, but it’s not required for VA loans.
Consider that thought as you decide what to do with that monthly discretionary income. A zero-sum budget means that you account for where every dollar you make will go – before your paycheck even hits your bank account. I like working with my net income as it makes my budget simpler, with one less category to account for. Entertainment expenses include any type of money spent on having fun. A health savings account is a great way to do that with extra tax advantages if you qualify for one.
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