How Much Does Home Ownership Really Cost?
Home ownership is one of the biggest goals in one’s life. However, more goes into home ownership than simply paying a mortgage each month. In fact, there are some other recurring expenses that can put you over your budget if you don’t plan accordingly. The following are the most common monthly expenses.
This is the most obvious, and will vary in cost depending on the home’s price, how much you put down, and your interest level that you work out with your lender. If it’s a fixed loan, the price will remain the same over the life of your mortgage loan terms. Otherwise, an adjustable loan changes as your benchmark changes.
Homeowners insurance premiums vary from year to year based on changes in your home’s appraised value, your policy’s deductible and coverage amounts, your claim history, and your credit score. As with property taxes, you pay one-twelfth of your annual homeowners premium with your monthly escrow payment. It is highly important to protect your home with coverage policy.
Private mortgage insurance:
If you put down less than 20% of the home’s price in your down payment, you’ll need to pay an additional monthly expense for private mortgage insurance (PMI).
PMI protects your lender from financial loss if your home is foreclosed upon and sold at a discount relative to your purchase price. If you have good credit, your lender may assess PMI premiums until your loan-to-value (LTV) ratio (the ratio of your current mortgage balance to your home’s total value) reaches 78%. However, lenders generally honor borrowers’ PMI cancellation requests once LTV reaches 80%. If you pose a higher credit risk, your lender may require you to carry PMI until your LTV is lower.
Depending on where you live, your city’s property taxes will vary each year. You will typically pay 1/12th of the total amount each year.
Finally, you’ll need to factor in costs for utilities. Everything from water, gas and electricity to phones, internet and cable are recurring monthly expenses you’ll need to budget for. In addition, monthly maintenance is another factor to consider. For example, lawn mowing, appliance maintenance, and plumbing repairs are all the responsibility of the homeowner.
Preparing to buy your first house can be daunting. Credit scores, down payments, and mortgages are all on your mind. Buying your first home can be one of the most exhilarating — and stressful — moments of your life. But armed with the right guide, your @TonyClarkRealtor as your informed guide, you can shop for a house, apply for a mortgage, and close the deal with confidence! We got you! #CallClark
Buying your first home is exciting, but there’s a lot to think about before you start looking. Start by getting all your finances in order, and using online tools to compare mortgage rates, and manage your credit score. Strongly consider hiring the right guide, your @TonyClarkRealtor as your informed guide, you can shop for a house, apply for a mortgage, and close the deal with confidence! We got you! #CallClark
Tony Clark Realtors believes every client should feel confident when buying and selling a home. Since 1976, we are the Owensboro Kentucky market expert.
Tony Clark Realtors | 2934 Frederica Street Owensboro, Kentucky | (270) 683-SOLD