Extra Expenses First Time Home Buyer's Need To Know
Buying your first home can be one of the most exciting times of your life. Home ownership can bring an enormous sense of pride. However, there are several things to consider before you sign on the dotted line. For most people, buying their first home at the Lake of the Ozarks will be their biggest financial decision. At Devine & Associates, we are educated on the home buying process and can help you with your first home purchase. There are more expenses than just the price of the home. It is important to go into your new home feeling confident you have the financial means to owning your first home. Below are some additional items to budget in:
If you rented previously, you probably had a landlord to take care of all the maintenance involved in the home. By making a phone call, any issues were most likely resolved at no extra expense to you. When you are a home owner, you will be responsible for any repairs and upkeep of the home. Whether you will be maintaining your home or hiring someone, it will cost money. Routine lawn care requires tools and equipment you may not have. Unexpected repairs can be costly. You may even consider getting a home warranty to cover major appliance and system break downs. This will be an additional expense to factor in, if you decide to purchase a home warranty.
Generally, rentals come with appliances and sometimes even furniture, so you may not have these items to furnish a home. These higher priced pieces along with smaller items, such as blinds, small kitchen appliances, and basic household items can add up quickly.
Home Maintenance
If you rented previously, you probably had a landlord to take care of all the maintenance involved in the home. By making a phone call, any issues were most likely resolved at no extra expense to you. When you are a home owner, you will be responsible for any repairs and upkeep of the home. Whether you will be maintaining your home or hiring someone, it will cost money. Routine lawn care requires tools and equipment you may not have. Unexpected repairs can be costly. You may even consider getting a home warranty to cover major appliance and system break downs. This will be an additional expense to factor in, if you decide to purchase a home warranty.
Appliances and Furnishings
Generally, rentals come with appliances and sometimes even furniture, so you may not have these items to furnish a home. These higher priced pieces along with smaller items, such as blinds, small kitchen appliances, and basic household items can add up quickly.
Mortgage and Homeowner's Insurance
You will be required to obtain homeowner's insurance, if you are getting a loan to purchase your home. This protects you from theft or fire. In areas prone to flooding or tornadoes, you may want to get additional insurance. There are ways to reduce the cost of homeowner's insurance. Check with your insurance agent about bundling your home and automobiles. Additionally, if you were unable to put a 20% down payment on the home that most lenders require, you will have to carry mortgage insurance. This protects the bank in case you cannot make your payments. Both of these insurances can usually be included in your monthly mortgage payment, but this means the payment is going to be higher than you initially thought.
Property Taxes
Unlike renting, owning a home requires paying an annual property tax. This amount is usually disclosed on the listing and you should know what to expect ahead of time. This can usually be added to your monthly payment or you can decide to pay it all to the county assessor at one time. Either way, it is a substantial amount to budget in when purchasing a home.
Earnest Money
When you make an offer on a home, you will put earnest money down to let the seller know you are serious. This allows the seller to be comfortable taking the home off the market while the sale proceeds. The earnest money will be applied to the down payment or closing costs if the offer is accepted. If the offer gets rejected, the money will be returned to you.
Down Payment
It is rare to be able to purchase a home without a down payment. Sometimes in rural areas, you can qualify for a USDA loan, which may not require anything down. For FHA loans, you may be able to get away with less than 5%, but most conventional loans require 5%-20% down.
Closing Costs
Be prepared to pay the closing costs unless you have negotiated with the seller to pay them. They can cover fees for inspections, the appraisal, a home warranty, and documentation preparation. You should plan on another 3-4% of your home's value to cover these costs.
Purchase Your First Home with Devine & Associates
At Devine & Associates, we have helped first time home buyers at the Lake of the Ozarks realize their real estate dreams. If you have taken into account all of these extra first time home buyer expenses, and are ready to find that ideal home, contact us (573) 392-9900 today!
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