Becoming a homeowner is a huge financial undertaking. In addition to the upfront costs like a down payment, getting loan approval for the appraised purchase price of the home and closing costs, you also need to calculate how much money you will need after for costs with buying a new home. It’s more than just your income that the bank will review. At Chelsea State Bank, we will work with you to make sure your monthly costs can’t exceed a percentage of your income in relation to your expenses so that you can meet your total monthly homeownership payment obligation. Chelsea State Bank will look at your debts in addition to your income along with costs that you need to anticipate after buying a new home. Here are some of the items you can anticipate after for costs with buying a new home.
1) Homeowner’s Insurance
Homeowner’s Insurance insures the property against any damages. Most financial institutions including Chelsea State Bank will require you to carry homeowner’s insurance. You will want to compare home insurance quotes from at least three different insurance companies to make sure you’re getting the best deal.
2) Homeowners Association Fee (HOA)
Homeowners Association Fee (HOA) is an amount of money that must be paid monthly by owners of certain types of residential properties, and HOAs collect these fees to assist with maintaining and improving properties in the association. HOA fees are almost always levied on condominium owners, but they may also apply in some neighborhoods of single-family homes. For condominium owners, HOA fees typically cover the costs of maintaining the building’s common areas, such as lobbies, patios, landscaping, swimming pools, and elevators. The association may also levy special assessments from time to time if its reserve funds are not sufficient to cover a major repair, such as a new roof or road repairs. HOA fees can also apply to single-family houses in certain neighborhoods, particularly if there are common amenities such as tennis courts, a community clubhouse and pool, or neighborhood parks to maintain.
3) Moving Expenses
Moving expenses will depend on several factors. Costs can vary from a one- or two-story apartment or home, how much needs to be moved, the number of rooms, and moving distance. Just like with any service you will want to get quotes from several different moving companies to ensure you get the best rate.
4) Home Maintenance
Home maintenance costs need to be budgeted for unexpected home repairs. A good rule of thumb is the one-percent-rule. Set aside at least one percent of your home’s value every year for home maintenance. For a $360,000 house, this works out to $3,600 per year, or $300 per month.
Utilities like heat and lights, may require you to pay a deposit at the beginning, unless you have good credit. The cost of utilities will depend on many factors including your use and if you have energy efficient appliances, windows and insulation. There may also be fees for setting up or transferring cable and internet services. If you’re moving into a bigger place your utility costs may be much higher than before. In addition, you may want to also set up a home monitoring system in your new house. Some homes come pre-wired with the equipment but will require a setup fee.
6) New Furniture
New furniture may be required if you’re moving to a larger space. You will want to keep in mind that you will need more furniture, wall art, curtains, etc. Decor that went well in your old space may not work as well in your new home. Unless you are okay with what you have and don’t mind your new bigger space feeling a bit empty, you need to budget accordingly.
Renovation needs can vary, but in addition to your annual maintenance costs, it is a good idea to set aside some extra cash for remodeling and future updates as needed. Once you get into your new space, the ideas start to expand.
When getting a mortgage loan, always talk to one of our experts at Chelsea State Bank about costs you can expect in the first year and beyond for home ownership. You want to have a good understanding of the full homeownership cost and Chelsea State Bank can help you make those calculations. Contact us at (734) 475-4210 or online here.
Chelsea State Bank is an Equal Housing Lender.