The house hunt is on! You’ve narrowed down your search to a couple of neighborhoods and have started visiting open house events to make comparisons. Now it’s time to get serious by asking yourself a very serious question: How much money do I need to buy a house?
What you can afford is based on a number of factors, most importantly a steady income and knowing your expenses. When putting pen to paper, consider home ownership expenses such as a down payment, closing and moving costs, repairs and maintenance, your monthly mortgage payment and, of course, utilities. Your mortgage lender or financial adviser can provide more details and guidance for your specific situation.
How much money do I need to buy a house? Let’s take a look!
- A home inspection will typically cost anywhere from $300 to $600. This is an important step in purchasing a house and could, potentially, save you much more down the road by spotting repair and maintenance issues that you may have overlooked.
- Your bank will require a home appraisal, which is a professional’s estimate of the home’s value. This will likely cost in the $300 to $500 range.
- A down payment will set you back up to 20 percent of the purchase price of the home, depending on the type of mortgage you select. An FHA loan, for example, requires a much smaller down payment amount if you are eligible. Consult your Realtor or mortgage lender to review your options. Keep in mind that a larger downpayment will result in smaller mortgage payments.
- These are many fees that make up the closing costs, which typically run from 2 to 5 percent of the purchase price. Closing fees include items such as homeowner’s insurance, lender fees, private mortgage insurance (PMI), title insurance, recording fees, property taxes and more.
- Don’t forget about moving costs. This is when having a large family or lots of friends can come in handy!
- Once the home is yours, you will be responsible for making your monthly mortgage payments. This amount will not be a surprise. Your mortgage lender will provide such details before you sign on the dotted line.
- Remember to budget for your utility costs: Gas, electric, water, internet/cable television, telephone, etc. Some of these payments are fixed when you sign a contact for service, while others will vary from month to month and season to season.
- As a homeowner, you will also be responsible for repairs and maintenance to the home. Therefore, make sure there’s a little extra in your savings account for both the routine and the unexpected.
- Finally, don’t forget that you still need to eat, purchase groceries and household items, and put gas in your car, and you’ll want to have some additional funds in reserve for entertainment, gift giving, vacations, etc.
As you can see, there are a lot of variables when answering the question of how much money do I need to buy a house. For more information and answers to any questions you may have, please contact The Olear Team today!