Buying a home is one of the most exciting events in life, especially when it’s your first real estate purchase. But there are plenty of questions you may be asking yourself too, including how much you should expect to spend—especially if you’re a first-time buyer. How much house can you reasonably afford?
As you answer that question, there are obvious expenses you’ll likely be thinking about, such as the down payment. But there are other costs to consider as well. Ready your finances now, and you’ll be ensuring you’re in good standing when you’re handed the keys to your new home.
Read on to discover the typical expenses you’ll experience with your new home, so you can be better prepared to invest in a property that is comfortably affordable for your circumstances.
1. Down Payment
Depending on the type of loan you get, your required down payment could be as little as zero, or as much as 20 percent of the purchase price of your new house. For example, if you buy a $150,000 home and you’re required to put at least 10% down, you’d bring at least $15,000 to closing day, since that is when it is due.
2. Closing Costs
If you’re like many new home buyers out there, you might have thought closing costs meant the deposit you bring with you on closing day. Not so. They’re actually the upfront fees charged by the lender in exchange for originating the loan.
Closing costs pay for things like an appraisal, title insurance, and the inspection recommended before buying a house. You’ll also be covering any other required lender’s fees, such as the cost of processing and underwriting the loan, as well as fees for recording the deed, preparing loan documents, and obtaining credit reports. These expenses will be affected by a number of factors, such as where your new home is located, as well as the size and type of your loan.
And just like the down payment, closing costs are due when you close and take control of your property. In 2020, the average closing costs nationally for a single-family home was around $6,000.
3. Maintenance and Repairs
It’s a good idea to start an emergency fund now, while you’re thinking about buying a home because it can help cover costly repairs when an urgent situation arises.
This can be a big surprise to first-time homebuyers who are used to having a landlord handle repairs for a rental property. When you own the home, you’ll be the one spending the money to make things right. By saving up for maintenance, you can cover regular upkeep as well as have the funds if a sudden emergency like a broken pipe arises.
Average annual costs to maintain a home’s HVAC system, gutter systems, water heater and fireplace, for example, is between $380-$800. Other upkeep, such as for new roofing, can cost a lot more—so it’s wise to save up as much as you can in your maintenance/emergency fund.
4. Moving Costs
The actual process of moving has a cost to consider as well. Hiring movers, renting the moving truck, as well as buying boxes and moving tape all add up. Take into account other, smaller expenses too, such as gas for the numerous trips you may be taking in your car between properties, and the food and water you plan to supply for your friends and family who are pitching in to help.
The national average cost to move is about $1,400, but keep in mind that price is for a two-person moving team helping you make a local move. For long-distance moves, the average cost is more than double, between $2,200 and $5,700.
5. Furniture and Appliances
Depending on the size and condition of your new house, you’ll need to buy many things, such as new light fixtures, additional seating, lawnmowers, and other home equipment. Some houses come with appliances like the stove included, while others don’t. (You’ll negotiate items like this with the seller.)
For first-time homebuyers who don’t have a lot of furniture and big appliances yet, this set of costs can add up fast. For example, a new sofa can cost $1,000 or more. In all, new home buyers spend an average of $3,700 on home furnishings and appliances.
6. HOA Fees
If your new home is located in a HOA (homeowners association) community, you will be required to pay HOA fees. These fees take care of the cost of maintaining common areas you share with your neighbors, such as patios, pools, tennis courts, greenbelts and community clubhouses.
The average fee you’ll pay if you’re in such a community is $250 a year.
7. Mortgage Payment
And finally, there’s your new mortgage payment to plan for. On a $250,000 mortgage with an annual percentage rate (APR) of 4%, you’ll pay close to $1,200 a month for a 30-year term, or around $1,850 for a 15-year mortgage. These are expenses you’ll need to factor carefully into your budget so that you are investing in a home you can comfortably afford.
Get Expert Home Buying Guidance from Top REALTORS
Finding the right home for the best price can be a delightful experience when you’re working with the right team. At McGraw REALTORS, we’re experts in matching homebuyers with great properties in Oklahoma and northwest Arkansas. We’ll guide you through the process of locating, negotiating and investing in a home that fits your needs.
Check out our listings to find a REALTOR in your area—we’re looking forward to hearing from you!