Before you buy…

If you’re in the market for your first home, you likely know the financial preparation that goes into the process. Before you tour your first property, you should reach out to one or more mortgage lenders to learn how much home you can afford and what you will need by way of a down payment.

You will also be provided with an estimate of closing costs and a breakdown of your monthly payment.

But when you’re preparing to buy your first home, there are other costs to take into consideration besides your closing costs and down payment. Here are the additional costs that you can expect when you purchase your first home:

  1. Homeowner’s insurance. Your mortgage lender will ask for proof of homeowner’s insurance before giving final approval of your mortgage loan. Ask your lender how many months of homeowner’s insurance you will need to pay upfront.
  2. Home inspection. You will want to have a home inspection done before closing on your home, a cost you will need to shoulder. The inspection is typically done after your offer is accepted, but before closing.
  3. Property taxes. These vary by location, so ask your real estate agent for the tax rate in the market where you are buying. The amount of property tax is dependent on the home’s assessed value. The amount of property tax you will need to pay, and when you pay it, will depend on the date you close on your home and the date of the tax bill.
  4. Repairs and updates. Even move-in-ready homes typically need a few repairs and updates. You may have asked the seller to make some repairs based on the results of the home inspection, but there are likely still some minor repairs you will need to address. Painting, new furniture and décor, and landscaping are also potential costs to keep in mind as you build your home-buying budget.
  5. Utilities. If you are moving from an apartment into a new home or from a small rental home into a more spacious house, you can expect to have to pay more as a homeowner. Be sure to include these higher costs in your monthly budget. There may also be additional fees to put utilities into your name.

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