It is quite difficult to correctly calculate all the costs when buying a house. Newcomers who buy housing for the first time make mistakes especially often. In the future, these mistakes may be reflected in the form of unbearable payments and problems with the mortgage. Therefore, in this article we want to talk about the most overall costs associated with buying a home. But before we start calculating, we want to ask you a question: Have you already chosen the best area? This can be challenging as well. If you are not in a hurry to move, it is much more profitable to consider options under construction. For example, check out Smart Brickell on iNew-Homes. Now let’s get down to the question: how much does it cost to buy a house?
All Expenses
Typically, the total is broken down into three categories:
- The average cost of buying a home in the United States;
- Initial costs of buying a house;
- Recurrent costs of owning a home;
The exact value of the cost of buying a house will be calculated by a bank employee when applying for a mortgage. If the buyer operates with his own funds, the realtor deals with the calculations. In both cases, it is better to entrust the verification of all documents to a real estate lawyer. It only protects the interests of the buyer especially when considering things like an FHA Repurchase.
How much money will you need on average?
Usual cost of buying a house depends not only on the amount the seller wants to receive. The purchaser will be required to pay taxes in accordance with state law. Also, the buyer cannot influence the amount of remuneration for the realtor and lawyer. But the price of a house is highly dependent on the area.
On our site, we have collected a variety of properties located in developing areas. For example, you can rate new homes in New Jersey on iNew-Homes. These houses are now more than affordable. But in a few years, their price will rise significantly, as the infrastructure of the regions develops. With the growing popularity and the number of residents in the area, the price of real estate also increases. If you plan to sell your home in the future, this will be a great deal.
How much money does it take to get the deal done?
The compulsory costs that will fall on the shoulders of the buyer include:
- The down payment is 3-20%;
- The closing costs the deal participants pay in half (3-5% of the transaction amount);
- Reserves.
There are usually no questions with the first two points. Inexperienced buyers are often unaware of the need to have money in reserve. If you are buying a house with a mortgage, the lending company will most likely want to make sure of your solvency. Even after you have verified your income, creditors will want to hedge against non-payment of debt. Usually, banks just need to provide an extract from the reserve account, which has an amount equal to the mortgage payments for two months. This insurance is enough to get you approved for a mortgage.
Owning a home is always costly
The cost of buying a home doesn’t end with the close of the deal. As a homeowner, you have several recurring costs to cover. The monthly amount can be substantial for your budget. Usually recurring payments include:
- Mortgage payments – the average amount across the US is $ 1,100 – 1,700 per month;
- Taxes vary from state to state in the range of 0 – 2.5% (most often the first payment is charged at the closing of the transaction during the purchase process, and the payment is sometimes included in the amount of the mortgage);
- Debt insurance is charged when the first installment is below 20% (insurance will cost the buyer an additional 0.5-2% of the loan value);
- Homeowners insurance costs an average of $ 60-100 per month (you will be insured against property damage, including floods and earthquakes);
- HOA fees – the administration of condominiums and townhouses charges this money for the maintenance of the local area (approximately $ 40 – 300 per month);
- Bills foк electricity and cold and hot running water take on average $ 160-250 per month;
- 1% from full sum you should save for a renovation.
You can ask for more tips about homes and real estate from a reputable realtor. However, if you are interested to become part of the real estate industry and want to become successful, these are the aspects that you must consider.