It’s easy for new homebuyers to get caught up in the basic costs and perceived affordability of purchasing their first home. But, beyond the mortgage payment, to avoid budget shocks later, it’s best to discover all the costs of home ownership. Costs will vary depending on the type of home (condo or single-family), location (urban, suburban or rural) and the type of mortgage loan you receive.
Mortgage interest: At early 2007 rates figure on $8.00 per thousand borrowed. If you have less than stellar credit this cost might increase.
Homeowners insurance: Plan on $3.00 for each $1,000 in structural value. Insure your home for a minimum of the contract price. Personal property is an added cost. Condo owners will be required by lenders to insure from the walls out, but not personal property. Many a condo owner who declined personal property had misgivings after the washing machine or dishwasher in the unit above flooded their unit.
Property Taxes: To be on the safe side, always figure more. Property tax rates vary widely across the nation, but save1.5-2% annually of he contract price will safeguard you from budget stretch after you close.
Flood insurance: Rates for policies vary from two to seven hundred dollars a year, based on your flood risk level.
Private mortgage insurance: When a buyer puts less than twenty-percent down on a home purchase, mortgage lenders typically require them to purchase private mortgage insurance or PMI. The rate varies widely depending on a variety of factors, credit rating, savings, price of home, and the amount of your down payment. Plan on $150-$300 a month for PMI if required. As an alternative, research lenders off loans that eliminate PMI, in products such as 80-10-10 loans.
Condo association dues: don’t overlook this fixed non-deductible monthly housing expense. Dues cover the management and maintenance of the condo building and grounds. Depending n the level of service’s offered, the size of the unit and whether any or some of your unit utilities are included, project a monthly expense in the $200-$400 range.
Mark Nash is the author of five real estate books, new for 2007; Real Estate A-Z for Buying & Selling a Home. William J. Sittig, Chief of the Science, Technology and Business Division of The Library of Congress has invited Mark to make a presentation on 1001 Tips for Buying and Selling a Home to the members, public and staff of the Library on March 21, 2007. Nash has been featured on Bloomberg Video-on-Demand, CBS The Early Show, CNN, and The Today Show. He is a syndicated columnist for RealtyTimes.com and reviews books for MyShelf.com and The Midwest Review of Books. To subscribe to his free monthly ezine; Agent to Agent visit: http://www.AgenttoAgentezine.com