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Costs You Shouldn’t Forget As a First-Time Homebuyer

If you’ll soon be buying a home of your own for the first time, you’re likely quite excited. There’s nothing like owning your very own property and decorating and remodeling it as you please without having to check with a landlord first. That said, you’ve got to make sure you’ve got the full picture in regards to how much you can expect to pay, making sure you remember items like the cost of Cleveland homeowners insurance and more.

Home Buyer

Property Taxes

Many a first-time homebuyer forgets to account for the cost of property tax, which often results in scrambling when the tax is due and having to take out a loan or pay penalty fees. The best thing to do is factor in the cost of your property taxes when you’re determining just how much home you can afford. Then, you can divide the cost of property tax by 12 and put that amount back every month so you have it when tax time rolls around.

Homeowners Insurance

Even though you’ll likely be required to have homeowners insurance since you’re buying a home for the first time, it still deserves a spot on this list. That’s because you need to make sure you budget for those monthly homeowners insurance payments. Also, it’s best to do some research on your own about the cost of homeowners insurance in your area as well as if there are any natural disasters such as floods or earthquakes that you need to factor into your policy.

Closing Costs

You’d think that it’s time to celebrate in earnest when you’re ready to take care of closing costs, but the truth is that those costs can make you want to cancel the celebration altogether. Know that it’s common for homebuyers to have to pay closing costs of anywhere from 2 to 5% of their property’s purchasing price. You can most certainly budget for those costs, but you won’t know for certain what they are until your lender provides you with a Good Faith Estimate.

Emergency Costs

It takes time to get from start to finish when you’re buying a home, and any number of issues can bring the process to a stumbling halt, issues that might require payment on your part to get things rolling again. For instance, you could receive a low appraisal. Just make sure you talk things over with your real estate agent and the seller if you hit such a snag. You need to know for sure that the home you’ve got your eye on is actually worth the extra money you’re about to hand over.

Utility Bills

Even if you’re used to paying for your electricity, water, cable and other utility bills separately from your rent, there’s a good chance that those costs will go up when you move into your home, mainly because your new residence might be bigger than your last apartment. You might also have additional costs you aren’t used to paying, such as garbage collection.

While you might feel you’re mentally ready to own a home, you might not quite be financially ready. By keeping the above costs in mind, you’re sure to be a happy homeowner before you know it.

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