One of the biggest things to consider about becoming a homeowner is the cost. Most buyers need to put away a percentage of the home price as a down payment, often to the tune of 20%. Getting ready to buy a home does mean getting your financial affairs in order. This includes everything from your credit score to your debt-to-income ratio. Before you pull the trigger on a new place, consider these other costs of owning a house.
Insurance and Property Taxes
You’ve probably come across mortgage calculators online where you can plug in a home price, an interest rate, and loan term to compare your monthly payment to your current rent. Most lenders require borrowers to carry home insurance Newark DE to protect their investment over the life of the loan. Mortgage payments usually include insurance and property taxes, so factor those into your analysis.
If you’ve lived in an apartment, you’ve probably called a property manager whenever you had a broken appliance or other issues in your unit. As a homeowner, you’ll be responsible for the maintenance and upkeep of your residence. This includes the structure, any major appliances, and the various systems, including mechanical, plumbing, electrical, and HVAC. Many owners will purchase home warranty plans to cover repairs.
If your new residence is part of a neighborhood or subdivision, you may be subject to annual HOA fees that cover community upkeep. These fees are mandatory and failure to pay could lead to a lien being placed on your property. Certain utility bills such as electricity, gas, and water, may increase significantly for a house versus an apartment. Account for these changes in your planning.
Money is a big factor for you to contemplate when you’re ready to go from a renter to a homeowner. There are other costs to include besides a mortgage payment, a down payment contribution, or other purchasing costs. A more complete picture of your financial responsibility helps you make a more informed choice.