Related Sponsors

Other Costs

Home » Real Estate » How Much House Can I Afford? » Other Costs

It is one thing to determine how much actual house you can buy, but many people forget how many other additional costs there are when purchasing a home.

• Down Payment and Closing Cost: A down payment, as mentioned, is typically 10-20% of the asking price of the house. Closing costs run around 2-5% of the sale price. That can easily add up to thousands of dollars above what you initially planned for.
• Private Mortgage Insurance (PMI): If you are unable to afford 20% for the down payment you will be paying for private mortgage insurance. This protects the lender in the case that you default.
• Property Taxes: If you own property you will pay property taxes. These vary from state to state and city to city, so it might be a good idea to check with the tax office in the area to determine how much you will likely be shelling out.
• Homeowner's Insurance: Your property will have to be insured in order to get a loan. Some loans will require you to have special coverage for things such as earthquakes and floods depending on the area where your property is located.
• Home Owner Association Fees: Some communities impose fees for to those living in their neighborhoods, additions, etc. Check with your agent to see if any of these fees apply to the home you are looking at.
• Furnishings/Renovation: Depending on what stage you are in your life and how much work your house will need you could find yourself paying a good deal of money on furnishings and/or renovations. For those with almost nothing, you will need to buy appliances, furniture, curtains, housewares, etc. Most people also do a little renovating before moving in like painting and installing new carpet.
• Maintenance: You are no longer renting so you must calculate in the cost of maintaining a home. This includes buying a lawn mower or paying for someone to care for your yard. You also need to have money saved up for any emergencies like plumbing problems, roof leaks, bursting pipes, and broken appliances. Experts suggest having three month's worth expenses saved up for such maintenance.
• Monthly Bills: If you are moving into a larger house than you are currently in, don't forget to budget in the cost of heating and cooling your home. Electricity and energy cost have been on a significant rise in the U.S. recently forcing some people to rethink the overall affordability of their homes.

Next Page: Helpful Hints and Easy Calculations

Related How Much House Can I Afford? Articles