Are you considering purchasing a home in the near future? If so, it is important that you take a look at the true cost of home ownership before determining how much you have available to spend on your new home. Many homeowners and potential homeowners fail to look at all the expenses involved in home ownership. They only consider how much their mortgage will be, and how high their monthly payments will be.
Unfortunately, this has led many people to purchase homes that were out of their price range making it very difficult for them to keep up with all the additional expense. Before you set your budget for a new home and start shopping around, you should have a clear understanding of all the costs involved. Below is a look at some of the costs, besides a mortgage and interest payments that come with home ownership.
Inspection and Appraisal Fees
Oftentimes a bank or lending company will require you to have the home you want to purchase professionally inspected and appraised. The appraisal is done to ensure the price you are paying for the house is not significantly more than the mortgage you are taking out. The inspection, on the other hand, is done to ensure there is no extensive damage to the home that would require costly repairs. You will be expected to pay the fees for both of these services.
Stamp duty is a special tax charged on certain purchase, such as the purchase of a home. The amount of the stamp duty varies between the different states and territories, but you can expect to pay a couple thousand dollars for the purchase of a standard home. If you are a first-time homebuyer, you may be able to get these fees reduced under the First Home Plus program.
You will also need to pay a conveyancing fee to transfer the title of the home from the previous owners to you. This fee is typically paid for by the homebuyer, but could be paid by either party. These fees vary greatly between different providers, but will probably cost between $700 and $2,500. You may want to call around and see who offers the best rates for these services.
Almost all home mortgage lenders require you to take out homeowner’s insurance on your home. Even if you are not required, it is best to always insure your home. This will cover any damage done to your home, including accidental damage and weather related damage. The cost of the insurance will depend on the value of your home and the insurance company you work with.
There will also be moving expenses that you have to consider when purchasing a new home. You may have to pay a moving company to move all of your belongings to your new home. You will also have to pay to have all of your utilities transferred and set up at your new home. While these costs may be small individually, they add up when calculated together.
If you are moving to a larger home, you will probably need to purchase new furniture for your home. You may also need new appliances because your old ones may not fit into your new home, or you may not want to take them with you. While the expenses for these things vary greatly depending on your specific situation, you will probably have to spend a few thousand dollars to get everything you need.
Home Maintenance and Repairs
You will also need to save some money back to pay for home maintenance and home repairs. Unlike renting a home or apartment, when an appliance breaks down or damage is done to your home, you will be responsible for fixing it. The worst thing is that these expenses could occur suddenly, so you have to always be prepared to cover these costs.
This is a form of property tax and the rate of which you will have to pay is largely dependent upon the size of your lot or value of your home. See web definition here.
As you can see, there is much more involved in home ownership that just paying a monthly mortgage payment. It is a good idea to take all of these added expenses into account when determining how much money you have available not just to use for a down payment but to pay towards your monthly mortgage payments. This will make sure you purchase a house that fits your budget. These costs can easily accumulate into the tens of thousands of dollars depending on property value.
What other costs can you think of which are associated with purchasing and owning a home?
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