Expenses to Consider When Buying House
Ok, so saving for a downpayment is pretty common knowledge, but have you thought about all the "extra" costs that may come with purchasing a home?
Downpayment.
In the US a 20% downpayment is generally required to avoid Private Mortgage Insurance (PMI). This is insurance that protects the lender if you stop making your loan payments. Since you won't have significant equity in the home you're viewed as a risky investment because you could end upside on your house should the housing market crash again.
Closing costs can run from 2 - 5% of the loan cost.
They are variable on where you live and the terms of your purchase. Some of the fees included in your closing costs are negotiable, so always review with your realtor!
Condo or HOA fees.
These are only applicable if you are buying into an HOA or Condo, but these are almost always the buyers responsibility at closing.
Moving costs!
Whether you're hiring movers, renting a truck or guilting family and friends to help there's almost always moving costs. They can be as small as buying moving boxes and pizza and beer or as expensive as paying multiple movers to pack and move everything from your house.
Inspection costs!
Especially for first time home buyers I recommend not waiving inspections if you're not familiar with renovation and repair costs. Common inspections are a general home inspection, radon and termite. A home inspector alone can run atleast $400 and in many places much more!
Other important expenses are completely dependent on your situation, but they include: Furniture, Landscaping, and Renovations. It was 30 days from when our offer on our current house was accepted and we closed. In those 30 days the owner did 0 maintenance on the lawn. We had lots of yard work to do! You also have to plan for the potential of things breaking when you move in. You don't want to have a hot water heater go out and no funds to fix it.
A common amount recommended to have saved for a home purchase is 30% of the purchase price. However that can fluctuate a lot based on your situation and risk tolerance. You can buy a house with much, much less saved!
Are you house hunting? How much do you plan to saved for your purchase?