How Much Does It Really Cost to Buy a Home?
It’s the home-buying season and with mortgage rates at an all-time low, more first-time home-buyers have hit the market than ever. If you fall in this category, we don’t want you to be caught off-guard by the true costs of purchasing a home. In other words, you’ll want to consider and plan for several additional costs other than the purchase price of the home. Before you head to the realtor’s office, make sure you’ve saved up and included the following costs into your budget.
Nowadays, your property taxes may be included in your mortgage payment along with a couple of other additional home costs. If it’s not, you should be prepared to pay property taxes each year. Property taxes in Mississippi are currently at .80 percent.
This cost is also typically included in your mortgage payment. Your lender will calculate the estimated cost of your insurance, property taxes, and other additional home costs into the price of your mortgage. Money for these payments will go into an escrow account and paid by your lender when they are due. The current national average cost for home insurance is $95.51 per square feet.
Homeowner’s Association Fees
Always check for an HOA fee when shopping for homes. Not all neighborhoods have them but if yours does it could cost you between $200-$300 or more per year. This fee covers maintenance of common areas like the pool, gym, or park. If your neighborhood doesn’t offer these amenities, contact the head of the HOA to find out what your fees will cover.
Private Mortgage Insurance
You will only encounter this cost if your down payment is less than 20 percent and your lender chooses to implement this option as part of your loan agreement. Private mortgage insurance costs between .5-1 percent of your loan. That could add up to $2616 a year based on the average home cost of just over $261,000.
Sure, when you pay rent you usually pay for some utilities like the electricity separate from your rent payment. When you become a homeowner, you’re responsible for all home utilities including gas, water, electricity, and sewage. To get an idea of what your new home’s utilities will cost you each month, ask the sellers for copies of their utility bills from the last 12 months.
Repairs and Maintenance
Homeowners should save at least $4,000 - $5,000 a year for home repairs and maintenance. Rarely a year goes by that home doesn’t need a new appliance, HVAC repairs, or new gutters. Repairs and maintenance are just part of being a homeowner and every homeowner should be prepared for them each year.
Inspection and Appraisal
Never ever sign a contract on a home without conducting your own inspection and appraisal. Hiring these professionals will cost about $700 altogether but that can save you big on unexpected expenses later on.
Now that you know what it really costs to buy a home you can save and prepare your budget. Keep an eye out for our upcoming blog on the current costs of building a new home.