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Unfortunately, when buying a home most people only know about and consider a fraction of the costs that go into owning a house. We’re here to give you a breakdown of all costs involved in owning a house so you can make an informed decision before signing your mortgage papers.
Am I ready to buy a house?
Before you answer this question consider this: do you have college or credit card debt? How much savings do you have? Do you have a reliable source of income? What is your credit score? Your goal is to get a good interest rate at a reliable bank and having little to no debt, enough savings and good credit is the first step to that. You also want your debt to income ratio to be as small as possible.
House downpayment cost
This is the largest one-time expense in the cost of owning a home. Strive for having enough money saved to pay 20% of the sticker price of your home, this will help you get the lowest interest rate and the smallest fees. You can find lenders that give you a loan with a downpayment as little as 3% but you should expect to add monthly mortgage insurance payments to your household bills list. This goes without saying, but make sure you read every word of the mountain of paperwork you will have to sign with your bank. Once you have an official loan estimate on hand, take a look at the fees and get estimates from other brokers – often times you can save thousands just by making a couple of calls.
Monthly bills to pay when owning a house
- Mortgage and related payments
The average cost of owning a house per month is much more than just your mortgage. It also includes your interest, property taxes, insurance, homeowners’ association fees and more. Be aware of these fees and always comparison shop not just for the house, but for the bank as well – an interest rate of just half percent less can save you tens of thousands of dollars.
- Cost of home maintenance, utilities and more
If you’re used to renting you might be surprised how much it can cost to do home repairs. Make sure that you always have at least a thousand dollars set aside for unexpected plumbing and heating problems – these things always happen at the least convenient time. It is also a good idea to find out what you should expect to pay for utilities for every house you look at – utility costs for a house are often several times more expensive than for an apartment.
While all of these expenses may seem overwhelming, using a budgeting app, such as Cubux can help you organize and manage your expenses more easily. Cubux can help you set up multiple savings accounts for mortgage, utilities and rainy day scenarios, allowing you to easily track expenses.