Financial expert Rachel Langlois sheds light on some of the lesser known costs associated with buying a home.
When you buy a home, you know you`ll have to save for a down payment and make a monthly mortgage payment. However, there are several other aspects that you will need to pay for once you`re a homeowner, some of which may be unexpected. Check out some of the most common ones below:
PRIVATE MORTGAGE INSURANCE
Not all mortgage products require a 20% down payment. In return, however, you will have to pay what is known as private mortgage insurance. This protects the lender in the event that the borrower defaults on their loan. The cost of this depends on the amount of a down payment you were able to pay and your credit score. On average, it usually hovers around 0.3% and 1.50% of the mortgage.
HOME INSPECTION
Depending on the size of the home, your home inspection fee could vary anywhere from $200 to $400. Home inspections are an important part of the home buying process and shouldn`t be skimped on. It`s better to pay the few hundred dollars upfront then come across an unexpected problem down the road that costs thousands.
FEES
When you finish the mortgage process, you will have to pay some closing fees; these include lender fees, appraisal fees, title fees, and escrow fees. For this expense, you should plan on spending anywhere from 2% to 7% of the home`s value.
MOVING COSTS
The American Moving & Storage Association says the average cost of an in-state movie is about $2,300. To move out of the state, that cost could increase to about $4,300. Even if you are planning on doing most of the heavy lifting yourself, you will still have to buy moving supplies and perhaps rent a truck.
MAINTENANCE & REPAIRS
Even if you purchase a brand new home, repairs and maintenance are still a part of being a home owner. When creating your budget, you should set aside money each month that is specifically for taking care of your home. Remember to take into consideration that paying a little more money upfront for repairs & maintenance could save you money in the long run.
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