Do Not Buy A House Unless You Can Afford These New Expenses - BetterBe

Do Not Buy A House Unless You Can Afford These New Expenses

Purchasing a home is one of the most significant financial decisions you’ll make in your life. It’s often thrilling to imagine settling into a new space, but the excitement should be balanced with careful financial planning. It’s crucial to remember that the purchase price of a home is just the tip of the iceberg. Here’s what you need to consider before jumping in.

Understand the True Cost of Homeownership

Closing Costs: More Than Just a Down Payment

When buying a home, you might think your only major expense is the down payment. However, closing costs can add an additional 2% to 5% of your loan amount. These can include fees for loans, title insurance, and property transfers. If you are purchasing a $300,000 home, for example, you could be looking at an additional $6,000 to $15,000 in closing costs! Be sure to budget for these upfront expenses.

Ongoing Monthly Mortgage Payments

Many first-time homebuyers underestimate their monthly mortgage payments. Besides the base loan amount, don’t forget to account for property taxes, homeowner’s insurance, and possibly PMI (Private Mortgage Insurance) if your down payment is less than 20%. Use mortgage calculators available online to estimate your monthly liabilities accurately.

Maintenance and Repairs: Planning for the Unexpected

Owning a home means you’re responsible for all its upkeep. According to industry experts, you should budget 1% of your home’s value each year for maintenance. This includes roof repairs, HVAC service, plumbing issues, and even cosmetic updates. Setting aside a dedicated maintenance fund can save you from stressful financial strains when unexpected repairs arise.

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