If you are looking to buy your first home, its because you know there are some great benefits to owning your own home. There are also some costs associated with it that many first-time buyers may not know about. I want to share 10 potential costs. This list may not be exhaustive, but it will give you an idea of what to plan for.
1. Earnest Money
This is typically 1 to 3% of the purchase price, and goes towards the downpayment or closing costs.
2. Option Fee
is typically $150 to $500 to purchase yourself a few days after the contract is signed to have the home inspected and to consider the purchase further.
You never, ever want to skip inspections on a pre-existing home. These cost around $300 – $1,000, depending on the size of the home.
A standard downpayment is 15-20%, but you may qualify for and decide to make a lower downpayment.
5. Private mortgage insurance (PMI)
If your down payment is less than 20% of the home’s purchase price, the lender will require you to pay monthly for private mortgage insurance (PMI) to protect the lender in case of default.
A Mortgage Insurance Premium is the equivalent of this for FHA loans.
6. Homeowners Insurance
This varies and can be more than $2,000 per year. I feel pretty sure my friend Christopher Washington with Goosehead Insurance in Round Rock can get you the best rate, so reach out to Chris as you are doing your research. Christopher Washington, Goosehead Insurance, (512) 599-9111, https://www.gooseheadinsurance.com/agents/christopher-washington/
7. Attorney Fees
To pay for attorney services used by the Title Company.
8. Title Company Fees
To pay for the services of the title Company.
9. Property Taxes
The property taxes will be prorated so that you will pay for only the months that you own the home during the year that you purchase. Of course, in future years, you will be responsible for all property taxes.
10. Home Warranty
A home warranty is an annual service contract that covers the repair or replacement of appliances and systems like refrigerators, A/C’s, and plumbing components. This could range from $220 to $1,500.
Check out https://smartasset.com/mortgage/closing-costs#gfe-table to get a good idea of what your closing costs may be.
If you want to own your own home, don’t let these costs scare you, but just remember to include them in your savings plan.
Feel free to reach out to me at 737-808-3607 or firstname.lastname@example.org.