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What Expenses Will I Have When Buying a Home?
Dated: August 13 2019
Many people get so excited at the prospect of owning their own home and dealing with the down payment and mortgage, that they overlook the many expenses that go into buying a home - both at the start and on an ongoing basis. Note that some of these fees might be upfront, and others rolled into the total cost of your mortgage, in which case they can have a significant impact on the actual amount you will have to pay in the end each month.
A Deposit or Earnest Money
Sometimes you will be asked for a deposit right away to secure a home. It will usually be part of your down payment. It should be refundable if the house does not pass inspection for any reason.
Every house should be inspected to make sure there are no hidden issues that can end up costing you big time once you move in. The average price is around $400, depending on the size of the home.
Title Deed Search and Transfer
The paperwork pertaining to the legal aspects of the property and its sale, a lawyer will do on your behalf to make sure the sale goes smoothly. The most important things are to be sure of the extent of the property, the right of the person to sell it to you, and any reasons why the house might not be eligible for sale - such as because it is located in a FEMA Special Flood Hazard Area (SFHA). This can hold up the whole sale, and/or require you to take out special flood insurance.
This will usually be required by the lender. In some cases, they might insist on their own insurance and add it as part of the monthly repayment. In other cases, you will have to shop around. However, this type of insurance is usually based on one’s credit score, so if your score is not good, you will end up paying more. Affordable Insurance of Acadiana
Private Mortgage Insurance (PMI)
PMI is arranged by the lender and provided by private insurance companies. PMI is usually required when you have a conventional loan and make a down payment of less than 20 percent of the home’s purchase price. If you’re refinancing with a conventional loan and your equity is less than 20 percent of the value of your home, PMI is also usually required.
This should be current at the time you are interested in buying the house, but if the sale drags on for some time, you could sign on the dotted line and then get slapped with the bill. In other cases, this will also be rolled into the monthly repayment. Check the due dates.
There are a number of costs associated with completing the sale and purchase of the home, commonly referred to as closing costs. These can include:
* Real estate attorney fees
* Title expenses
* Mortgage processing fees
* Title deed fees
* And others
These costs will be payable on the day of completion. Experts suggest you save 2% to 5% of the purchase price of the house so you don’t get hit with sticker shock.
A lot of people forget to factor in the cost of moving and/or storage once you buy the home.
The house should be in good repair, but if you plan any major changes to it such as painting or decorating a nursery, set aside money for your projects.
Some people will leave various items behind. Others will take them with them, such as appliances. Be sure what will be included and factor in these extras as needed.
Essential Furnishings, Curtains, Blinds, Carpets
You might be moving from a smaller place to a much larger one. Make a list of the essentials you will need. You probably won't be able to afford to fill every room at once, but shopping strategically can help.
As you can see, your mortgage is not the only cost when you buy a home. Use this list when working out your budget.
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Ted M. Daigle eXp Realty
1720 Kaliste Saloom Rd Suite B-2
Lafayette, Louisiana 70508
Ted M. Daigle | Realtor
About Ted Daigle – Realtor Growing up in Church Point, LA instilled values of hard work and dedication, which has carried over into every aspect of his life, including real estate. This Lafayette r....