What It Really Costs to Buy a House ?

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This is a guest post by Jane Smith

Depending on where you live, right now is a great time to buy a house. For many people, living in and owning a house is not only a rite of passage, it is also part of their life dream, so the temptation to move while the market favors buyers is great.

As tempting as it is, though, don’t be misled by low sale prices and simple mortgage calculations. There are a handful of other costs associated with owning a home that first-time home buyers (and even some who’ve already purchased a house) don’t consider when budgeting for a move into a house. So, before you sign that mortgage, review these costs of home-ownership, to determine if you are financially ready for that commitment:
1. Closing Costs

Similar to buying a car, you have to pay a percentage of the total value of a home loan when you first purchase the home. Not a year down the road, not six months from now; the day you buy the house. Usually you pay three to five percent. Closing costs include title insurance, inspections (which are necessary), property taxes, and other related fees. Be prepared to drop $30,000 or more when you buy.

2. Mortgage

While there are plenty of mortgage calculators out there, don’t take some arbitrary third party’s word for it — plan to pay more than you think you’ll have to on your mortgage each month, because that is what often happens.

3. Property Taxes

That’s right, ladies and gents, you have to pay taxes on your home. Unlike apartment or other kinds of rental living, homeowners have to pay an annual tax, usually calculated by multiplying the local tax rate by the assessed value of the home. When you are shopping, ask your realtor about the taxes on homes you are very interested in, to get a better idea of how much you’ll actually be spending.

4. Utilities

This shouldn’t be news, but the difference in price of your house utility bill compared to that of your apartment might be. Try to ask the seller of the house for records of their past utility bills; you don’t want to be surprised down the road when your electric bill is twice what you used to pay.

5. Repairs

This is a big one. When something breaks or goes haywire, there’s no landlord to ring up to come fix it. That responsibility is now on you. And if you don’t know how to do it, you’ll have to hire an expert who does, which can be costly. Luckily, you get an inspection report before you move in, so you’ll know more or less what to expect, but you can never plan for things breaking. Still, plan on things breaking, because they will. So budget it in. Start building an emergency fund of at least three to six months of average expenses, just in case.

6. Customization

Another big one. One of the upsides to owning a house is that you can do whatever you want to it: knock down a wall, put in tile, paint, replace bathtubs; there really is no end. But that’s the problem. You can spend thousands of dollars before you know it trying to make your house your house. When you first move in, make a list of things you might want or need to get or fix, and then set a budget to accommodate as much as possible, without going crazy.

7. Yards

No, I’m not talking about the metric unit here. With a house comes a front and (hopefully) a back yard. Again, this is a positive for most people, but it takes work and money to maintain a nice yard. If you live in an apartment, you probably don’t have a lawn mower, edger, bug spray, shovels, rakes, etc. You’ll have to buy all those things when you move. Buying a house is exciting, and marks a new chapter in your life, but if you aren’t careful and thoughtful about the associated costs of buying a house, you might find yourself buried in debt, and your new dream home will become a nightmare.

About the author: Jane Smith is a freelance writer and blogger. She writes about criminal background check for Backgroundcheck.org. Questions and comments can be sent to: janesmth161@gmail.com

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