All the Costs You Can Count on When Buying a Home for the First Time
When you’re saving up to buy your first home, you’re probably factoring in mortgage costs and monthly payments, adding insurance and maybe even realtor’s fees. But there are tons of other costs you may not be aware of.
Advance payment
How much do you pay the seller upfront on the value of the home. Many people think that you need to deposit 20 percent, but the average down payment is actually between six and 11 percent (depending on the market, your credit history, home, etc.), and sometimes less .
Mortgage payments
This is an obvious question: how much do you pay each month on your way to home ownership. According to a 2015 U.S. Census Bureau study of American housing stock, the average monthly mortgage payment was $ 1,030, but varies by region.
Private mortgage insurance
If you make a down payment of less than 20 percent, you will need to purchase private mortgage insurance for an additional fee. PMI is paid to the insurance company on a monthly basis.
If you get an FHA insured mortgage, you will pay FHA insurance on a monthly basis, not PMI.
Closing costs
This is where many surprises come in. As NerdWallet points out , most people have been saving up for years for a down payment, and while that’s a lot, it at least gives them a stake in the home. Closing costs, on the other hand, are a whole different story, and there are a lot of them: NerdWallet says that for a $ 300,000 home , you can expect to pay between $ 6,000 and $ 10,000 in additional costs to your lender and other third parties, broken down like this:
• Appraisal fees: professional appraisal of the value of a home. • Survey Fee: The cost of verifying the final lines of home ownership. • Bank Transfer Fee : Fee for transferring funds to buy a home. • Underwriting and processing fees : associated fees with the assessment, verification and processing of the loan application. • Document preparation fee : costs associated with preparing your loan documents for processing. • Discount points: are paid at the time of the transaction to reduce the interest rate on the mortgage. • Credit Report Fee : A fee for collecting your credit history and scores • Title Insurance: A mandatory policy that protects you in the event that the seller does not have full title deed and ownership.
• Registration fees : government fees for making new entries in the property register .
You may be able to negotiate with the seller to cover some of the closing costs.
Property tax
According to Zillow , homeowners spend an average of $ 9,080 a year on “hidden” housing costs , of which about $ 6,000 are in property taxes, homeowner insurance and utilities. You can ask your agent for a breakdown of property taxes in your area or use this Tax Fund tool .
Homeowners insurance, including in the above estimate, is different from the PMI and is a recurring annual cost. According to the aforementioned 2015 U.S. Housing Survey, the cumulative monthly housing costs, including property taxes and insurance, were $ 1,492 for homeowners with mortgages.
Reconstruction / maintenance
If you are arranging your excavation, you can add these costs to everything else. If this is your first time buying furniture, renovating and buying furniture will likely be less of a priority expense, but according to Zillow, you can expect to spend $ 3,021 a year on average on things like carpet cleaning, yard work, gutter cleaning, etc. If you don’t complete these tasks yourself.
Finally, don’t discount other expenses, such as relocation or homeowners association fees, which can add up quickly.