Youâ€™ve been approved for a mortgage, paid the closing costs and downpayment. The seller is handing over the keys.
Youâ€™re an official homeowner. That comes with rewards, but also responsibility.
Unlike theÂ apartment youâ€™ve rented throughout college or afterward, you will have ownership costs such as lawn and home maintenance, property taxes, and homeownerâ€™s insurance.
But these expenses don't have to make you â€śhouse-poor.â€ť A budget can help prevent a situation in which you are spending an outsize portion of your income on your home.
The key is knowing how much to budget forÂ costs you didn't experience as a renter. Fortunately it's not difficult to estimate additionalÂ costs of owning your new home.Click to see today's rates (Sep 23rd, 2017)
According to the National Association of Realtors, 30% of buyers have never purchased a home before.
If you wonder about your total monthly bill as a homeowner, you're not alone. Nearly one-third of buyers have never owned before.
A mortgage payment is just a partÂ of overall homeownership costs. When looking into homes, itâ€™s good to keep the following expenses in mind.
Knowing about the cost of living before you purchase your first home can save you the stress and anxiety in the long run.Click to see today's rates (Sep 23rd, 2017)
Property taxes vary widely across the country. Look at local listings, which detail annual property tax for your area.
Looking at one locale as an example, Cincinnatiâ€™s property tax is 1.774%. If youâ€™re looking for a home in the Cincinnati area youâ€™ll want to save 1.774% of your homeâ€™s value for property taxes. For example, if your potential home is around $100,000 you will pay nearly $1,800 per year in taxes.
But you wonâ€™t get a bill for this amount at the end of each year. Rather, your mortgage lender will collect one-twelfth of the amount with each mortgage payment, and pay your taxes for you when they are due.
Your lender will show you your total future payment including taxes when you apply for your mortgage so there are no surprises.
Buying a home is not like renting an apartment. As the homeowner, you are responsible for any wear and tear damage done to your home as well as lawn care. This could include replacing
appliances if they break, repairing leaky roofs or windows but also mowing and weed whacking the yard.
The average homeowner will spend roughly 1.5% of their home value on home maintenance per year. So if your home costs $100,000, you will pay $1,500 in maintenance expenses annually.
The 1.5% estimate is only if you have to fix the roof, foundation or an appliance in the home; but itâ€™s good to keep in mind when looking at a home. Does it look like a â€śfixer-upperâ€ť or is it move in ready?
As a homeowner, you have complete creative control on how you want to furnish your home. You can go all out and buy brand new furniture or you can shop at thrift shops and yard sales.
Be creative. You donâ€™t have to start out with the best furniture money can buy. Maybe one of your family members hasan extra couch or dining room set they want to get rid of.
And, thereâ€™s nothing wrong with a first home that is completely furnished by Craigslist.Click to see today's rates (Sep 23rd, 2017)
Having reserved funds in case of an emergency is also something to take into account when looking for a home. After purchasing the house will you have enough in your savings to make due for a couple months if something happens like getting laid off or becoming ill? Having six months worth of emergency money is a good cushion to have going into the purchasing of your home.
Donâ€™t worry, having a six month reserve is not required in order to purchase a home. In fact, there are a lot of 50 year olds who have owned a home for 20 years who donâ€™t have a six month cushion. Having any amount of savings is a good idea when looking for your first home.
Property taxes, furnishing, home maintenance and lawn care as well as potentially having reserved funds are all apart of the cost of living. When purchasing your first home remember that you will not only be making mortgage payments.
With the right planning, your homeownership experience can be enjoyable. It doesnâ€™t have to be a stressful proposition.Â Becoming "house-poor" is unnecessary.
Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.Click to see today's rates (Sep 23rd, 2017)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2017 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)