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Edgar Potapov
Edgar Potapov

What Are The Costs Of Buying A Home



Jules Borbely, a strategic real estate consultant for Real Estate Bees and COO of Oxford Property Group based in New York City, says that the biggest misconception first-time homebuyers have is that they only have to think about paying property taxes and the mortgage each month.




what are the costs of buying a home


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11. U.S. Department of Agriculture guarantee fee. USDA loans require that you pay a loan guarantee fee upfront in exchange for the government backing. This costs up to 3.5% of the total loan amount.


21. Home inspection fee. Not to be confused with the appraisal, the home inspection evaluates the condition of the home to make you aware of any damage or safety concerns. The inspection typically takes place after you sign the purchase agreement. The average home inspection costs $300 to $500, according to the Department of Housing and Urban Development.


38. Tax monitoring and research fees. This covers the cost of hiring someone to confirm all taxes on the home are paid and the tax is properly calculated. The price will depend on the provider your lender chooses.


41. Homeowners association transfer fee. Some HOAs charge a fee when a home is sold. The fee is usually about $200 or $250, but can vary. Usually the seller pays the fee, but the buyer could offer to pay to sweeten their deal.


54. Trash collection. This is often either charged as part of your property taxes or included in homeowners association fees. Expect to pay between $25 to $100 per month.


58. Siding and awnings. Keeping your siding and awning in good condition is important to keep your home weatherproof. Repairs or replacements cost about $25 per square foot.


61. Solar panel installation. Solar panels are increasingly popular as a way to go green and save on electric bills. The typical system costs $3 to $5 per watt of capacity, leading to a typical cost of $15,000 to $25,000 before tax incentives.


69. Security system. Security systems protect your home and family from intruders. Systems range from $50 to $1,000 or more, while monitoring services cost about $100 to $500 per year.


As a renter, you may already be used to paying for certain utilities, such as electricity and gas. Homeowners typically must cover all the costs involved with running their homes, which will likely be an increase from what you currently spend on utilities.


Buying your first home may seem like a smart move right now. With home prices on the rise, you might be thinking it's time to take the plunge while interest rates remain low. It's even more tempting when you compare a friend's or family member's mortgage payment to your monthly rent.


If you finance your home, your monthly mortgage payment will go toward the principal (the amount you originally borrowed) and the interest on that principal. The amount of your payment will depend on how much you borrow, the interest rate on your home loan and the amount of time you have to pay off the loan.


Added to your monthly mortgage cost could be a payment to build an escrow, or reserve, account. Escrow accounts allow you to save incrementally for homeowners insurance and property taxes. Lenders keep this money on deposit, and pay local governments and insurance companies when those bills are due.


If your down payment is less than 20 percent of the home's price, you usually are required by the lender to take out a private mortgage insurance policy. This policy protects the lender in case you default on the loan. According to the trade group Mortgage Insurance Companies of America, for a home costing about $200,000, the monthly premium runs between $50 and $100. The closer your down payment is to 20 percent, the lower your monthly cost for PMI.


If you borrow money from a mortgage lender, you're required to purchase homeowners insurance. According to the latest information available from the Insurance Information Institute, the average home insurance premium costs around $900 per year. "Before you buy a house, ask your insurance agent for a quote so you can budget accordingly," Montanaro says.


Local governments charge real estate taxes to pay for public expenses, such as schools, parks and sidewalks. The seller or seller's real estate agent can tell you the current annual tax on a property. "Also ask when the next tax assessment is scheduled and whether it will be increased by the sale of the home," suggests Halliwell.


When you own a home, there's no landlord to call if it needs repairs. A qualified home inspector can walk you through the condition of a residence before you sign on the dotted line. "Based on the home inspection, you'll get a pretty good snapshot of what to plan for -- the life expectancy of major components, like the roof, heating, plumbing and electrical," says Greg Herb, former regional vice president for the National Association of Realtors, and broker and president of Herb Real Estate Inc. of Pennsylvania.


Even so, you still should have a line item in your budget for other, ongoing maintenance. Whether it's replacing furnace filters, staining or refinishing decks, painting exterior trim or refreshing the plants and mulch in your landscaping, there's a high likelihood that you'll be spending regularly on your home's upkeep.


"As rewarding as homeownership can be, it does seem to come with an endless stream of expenses that fall into the 'other' category on your budget," says Halliwell. Whether it's a home security and monitoring system or weekly trips to the local home improvement store, make sure you have the money to cover it by building some wiggle room into the budget for your new home.


A 2013 consumer study conducted by Life Insurance and Market Research Association indicated 50 percent of U.S. households said they needed more life insurance, and 41 percent of recent shoppers of life insurance said a life event motivated them to shop for it. "A new home is definitely a life event," says Montanaro, "and that requires a fresh look at your life insurance coverage."


How much it costs to own a home depends on the home you own. Most people make monthly mortgage payments that includes taxes and homeowners insurance, and sometimes, mortgage insurance. It costs money to pay for electricity, heating, and water, and homeowners have to be prepared for unexpected expenses such as replacing a roof. If your home sits on a large property, yard care may be an expense, and if you live in a condominium or gated community, you will likely have HOA fees as well."}},"@type": "Question","name": "What Are the Benefits of Owning a Home?","acceptedAnswer": "@type": "Answer","text": "There are many benefits of homeownership. It can be financially beneficial because every mortgage payment helps you earn equity. Some mortgage payments may be lower than rent payments over time so that you may earn money in the long run. Homeownership may offer tax benefits, as well, and it can help you build your credit.","@type": "Question","name": "How Much Should I Save for Home Repairs?","acceptedAnswer": "@type": "Answer","text": "Some financial experts suggest budgeting for 1% or 2% of your mortgage balance as a yearly maintenance and repair fund, but the amount you should save depends on your home's age, condition, and size.","@type": "Question","name": "What Monthly Costs Are Included In Home Ownership?","acceptedAnswer": "@type": "Answer","text": "Most homeowners pay a monthly mortgage. Other potential monthly costs include taxes, homeowners insurance, private mortgage insurance (if you have an FHA mortgage), and HOA fees, if applicable. You will also likely pay monthly heating and cooling, electricity, and water. If you have taken out a home equity loan or a home equity line of credit, you may pay those each month as well."]}]}] Investing Stocks Bonds Fixed Income Mutual Funds ETFs Options 401(k) Roth IRA Fundamental Analysis Technical Analysis Markets View All Simulator Login / Portfolio Trade Research My Games Leaderboard Economy Government Policy Monetary Policy Fiscal Policy View All Personal Finance Financial Literacy Retirement Budgeting Saving Taxes Home Ownership View All News Markets Companies Earnings Economy Crypto Personal Finance Government View All Reviews Best Online Brokers Best Life Insurance Companies Best CD Rates Best Savings Accounts Best Personal Loans Best Credit Repair Companies Best Mortgage Rates Best Auto Loan Rates Best Credit Cards View All Academy Investing for Beginners Trading for Beginners Become a Day Trader Technical Analysis All Investing Courses All Trading Courses View All TradeSearchSearchPlease fill out this field.SearchSearchPlease fill out this field.InvestingInvesting Stocks Bonds Fixed Income Mutual Funds ETFs Options 401(k) Roth IRA Fundamental Analysis Technical Analysis Markets View All SimulatorSimulator Login / Portfolio Trade Research My Games Leaderboard EconomyEconomy Government Policy Monetary Policy Fiscal Policy View All Personal FinancePersonal Finance Financial Literacy Retirement Budgeting Saving Taxes Home Ownership View All NewsNews Markets Companies Earnings Economy Crypto Personal Finance Government View All ReviewsReviews Best Online Brokers Best Life Insurance Companies Best CD Rates Best Savings Accounts Best Personal Loans Best Credit Repair Companies Best Mortgage Rates Best Auto Loan Rates Best Credit Cards View All AcademyAcademy Investing for Beginners Trading for Beginners Become a Day Trader Technical Analysis All Investing Courses All Trading Courses View All Financial Terms Newsletter About Us Follow Us Facebook Instagram LinkedIn TikTok Twitter YouTube Table of ContentsExpandTable of ContentsProperty TaxesHOA and Condo FeesHomeowners InsuranceThe RoofThe HVAC SystemThe Electrical SystemPlumbingTermitesMoldLandscaping and Lawn CareHomeownership Costs FAQsThe Bottom LineHome InsuranceHome OwnershipThe Hidden Costs of Owning a HomeThough the perks are many, watch out for these extra expenses 041b061a72


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