If you’ve been working towards fulfilling the dream of homeownership, you likely have a particular figure in mind. Maybe you’ve spent some time looking at homes online and have found some out there in your range.
Mortgage rates are at record lows, meaning it’s the perfect time to buy a home. But, your mortgage payment is just one part of what you need to consider. If you want to make sure you’re financially prepared to be a homeowner, here is what you need to include in the cost of homeownership.
When you purchase a home, you’re going to face several upfront and one-time costs. These include:
- Inspections and Appraisal – You want to have the home inspected, and your mortgage company will generally ask for an appraisal.
- Down Payment – Down payment requirements vary by the type of mortgage you choose and can range from 0% to 20%.
- Closing Costs – These generally amount to between 2% and 5% of the purchase price.
- Moving Costs – This will include the cost of moving supplies, storage, and movers.
Your Mortgage Payment
Once you’ve moved into your home, you’ll begin making monthly mortgage payments to your lender. The payment includes an amount that goes towards the principal of your loan, as well as a portion for interest.
Depending on the type of mortgage you have, your insurance and property taxes might also be included in your monthly mortgage payment. If they aren’t, you may wish to set aside an additional amount each month, so you aren’t surprised when those annual or semi-annual bills come due. Further, some mortgages will also require mortgage insurance as part of your monthly payment.
Other Homeownership Costs
As a homeowner, you’ll also have to pay standard monthly bills like electricity, water, internet, cable, sewage, and trash service. If you live in a neighborhood with an HOA or Condo Association, don’t forget to factor those fees into your budget.
Homes require constant upkeep. Otherwise, your investment in the property isn’t going to hold its value. Some of the things you’ll need to pay for include:
- Yard work and landscaping
- Cleaning the home
- Pest treatment and prevention
- Maintaining the HVAC system
- Cleaning gutters
In all, you should expect to set aside about 1% of your home’s value annually for these general maintenance tasks.
Repairs and Unexpected Costs
Homeowners quickly discover that things tend to break down at inconvenient moments. Even if you meticulously maintain your home, something will invariably go wrong, and it will cost you.
You might need to replace an appliance the day before Thanksgiving or repair your HVAC system or roof after a major storm. Be sure to have an emergency fund set aside to handle these unexpected replacement and repair expenses.
If you’re a first-time home buyer in the Lexington, SC area, and want to explore homeownership, The Lafayette Team can help. With more than 17 years of combined real estate experience, our team of professionals brings together their knowledge of the area along with a superior level of service to help clients find the home of their dreams. Contact us today with any questions or to get started with your search.