You’ve been careful with your budget and ready to buy your first home. While this tells me you’re a skilled money manager, there are some additional costs that affect almost every homeowner. Your home search will be less stressful if you learn about these in advance, especially as they could affect the location, age, and condition of the home you buy.
- Property taxes
Since these don’t apply to renters, you may not be aware of them. But they’re part of your homeowner’s budget, so you’ll want to research the property tax structure for your preferred neighborhood or county before you buy. It’s a good idea to speak to local homeowners or real estate agents about this topic, although nobody will be able to give you a 100% accurate prediction of future tax adjustments.
After you qualify for a mortgage, you’ll need to shop for homeowner’s insurance. Currently, the average yearly premium is $1,428 for $250,000 of coverage. But if you’re buying in an area where hurricanes or wildfires are common, these can result in a higher premium. Areas that are at risk for flooding or earthquakes will require an additional policy. To make sure your insurance costs aren’t a deal-killer, it’s smart to shop for insurance before you even put in an offer for a home.
Costs of home repairs and maintenance, while they aren’t as easily defined as taxes and insurance, are often overlooked by new homeowners. Estimates for annual maintenance costs during the second quarter of 2023 reached almost $6,500, which was over $500 more than in 2022.
Hiring an experienced, savvy home inspector will help you estimate maintenance expenses. For example, your inspector can tell you when your home’s roof or HVAC may need to be replaced. Parking around 5% of your home’s purchase price in a savings account will help safeguard you and your budget.
Even though some would-be home buyers have stated that they are putting their plans on hold because of today’s rates, this is rarely an ideal solution. When you buy a home, you have more stability than when you rent. Beyond that, owning a home can also be a great long-term investment. There are valid reasons to act sooner than later. Rates could increase – at least one more rate hike is expected before the end of 2023. You could lose your dream home if it goes on the market next week, but you balk because of the current rates, you may lose your chance to own it. You could refinance – our economic environment is expected to cool in the years ahead meaning you can likely refinance to a lower rate during the first few years into your new home. Learn more about this option with Core Bank mortgage. Don’t be discouraged by the “today’s rate” you see online, as these are usually for a 30-year, fixed-rate mortgage. You may qualify for an adjustable-rate mortgage with a lower introductory rate that lasts five or 10 years. Buying points to secure a permanently lower rate is another option, and so is a temporary buy-down.
Let us help you with the home mortgage process so you can own your first home and achieve the American dream. Core Bank’s team of lenders are committed to helping you achieve your dreams, whether you’re ready to buy, build or refinance your home. We also have a 21 calendar day closing guarantee for conventional conforming loans. Contact someone from our team and apply today!