Purchasing a home is a major investment, and as with any investment, it is important to be educated before you dive in. To help you out, here are some important factors to consider when buying a home, such as: closing cost, maintenance and renovations and property taxes.
Closing costs (deeds/titles/land transfers/legal fees). Processing the papers for a home sale involves agencies at the private and government level, so check with a financial and/or real estate expert to get a list of how much each patch of dirt and piece of paper will cost. Make sure each step of the way that you know what you'll be signing and paying for when the property gets signed over. And the closing itself will run about 2 to 3 percent of the cost of the house [source: FICA]. Lenders provide truth in lending disclosure statements to detail percentages and financing fees before closing, and reviewing these carefully and asking questions can prevent charges from sneaking up on you [source: FDIC]. Source: Home.howstuffworks
Maintenance and Renovations
Trees fall on roofs. Gutters need cleaning. Driveways need repair…. A standard rule of thumb is to budget at least 1% of your home’s purchase price each year for home maintenance costs.
Maintenance can include things such as painting, replacing roof shingles, fixing or upgrading plumbing and wiring. The amount you will need to pay for maintenance can depend on the age of the home, the previous owners’ upkeep and the climate. Source: Realtor
All homeowners should have insurance, and usually, insurance is not optional for new homebuyers. In this instance, lenders require private mortgage insurance (PMI) to protect themselves in case the homeowner defaults on the mortgage. Unless buyers have a 20% down payment, or even if they do, but they’re considered a high risk, they can expect to pay PMI each month as a part of their mortgage payment. On conventional loans, PMI may be canceled when the home’s equity reaches 22%; but on FHA loans, PMI is paid for the duration of the loan period.
Property taxes are also included in the monthly mortgage amount. The tax amount is a percentage of the home’s value. Source: Investopedia
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