Currently mortgage interest rates remain near-record lows, but, will rise as the year unfolds as the Federal Reserve announced its plan to incrementally increase rates. If you've explored mortgage options, learning the differences between FHA, conventional, VA, fixed-rate, adjustable-rate and more, you probably feel prepared to apply for a home loan. While you might know what you'll probably pay each month for a mortgage, there's more to purchasing a property than securing financing. There are other costs that come with buying a home; and, you should know about them.

What Costs come with Buying a Home?

When you purchase a home, you're making an important investment decision. You're also locking-in your housing cost and adding a wealth asset. As you make payments, your loan balance reduces, while your property increases in value. Over the course of a few years, you'll begin to build equity. This is often one of your largest investment assets and you shouldn't go into the buying process without knowing all that's involved.

You're looking for a house and see the perfect listing. It has a big number on it. For simplicity's sake, say $200,000. If you're like most prospective homeowners, you think you will soon be talking to a lender and getting a loan for this amount. But as veteran homebuyers already know, you are going to pay much more than $200,000. True, almost everything we buy has a hidden cost. You buy a toothbrush for a couple bucks, and since you'll have to purchase toothpaste, the ownership cost of a toothbrush is more than $2 – especially if you throw in a toothbrush holder. Obviously, the hidden costs of buying a house are far more complex. --U.S. News and World Report

Your conscientious planning should include all the expenses which come with purchasing a residential property. If you don't plan and prepare for these, you'll likely be purchasing weeks or months of buyer's remorse. Don't let these various costs turn a wonderful experience into a headache; instead, know what costs come with buying a home:

  • Down payment. Though there are mortgage products requiring as little as 3.5 percent down, it's smart to put down 10 percent to 20 percent. This not only reduces your monthly payment, but also, helps to jumpstart your equity building. In addition, if you have a one-fifth down payment, you'll be able to avoid paying private mortgage insurance or PMI.
  • Inspections. There's a good reason while real estate purchase offers contain inspection contingencies -- to protect buyers. Put these benefits to good use and have money set aside for inspections so you aren't unpleasantly surprised after moving into the home.
  • Closing costs. Closing costs vary, but, you'll receive an estimate which will provide you with enough information. You should have enough money to cover these; otherwise, you'll have to roll the closing costs into your loan, which will increase your payment.
  • Moving. No one relishes moving and it's an unavoidable cost which comes with buying a home. You should be getting written estimates a couple of months to a few months in advance so you know what to expect. It's also a good time to pare down what you'll move in-order to reduce your moving expenses.
  • Utilities. You might need to place deposits on your new utility services; at the very least, you'll need to budget for these living expenses. You can cut down on your utility costs by cord cutting and through other measures to give yourself a little more discretionary funds.
  • Miscellaneous expenses. Unless you're moving into a new construction home that's picture perfect, there will be miscellaneous items which you'll want to address. These odds and ends will be part of your new life and it's good to be prepared with a little extra money.

When you're ready to search for the right property in Vistancia in Peoria, nearby West Lone Mountain Parkway, North 117th Drive, North Blackstone Road, West Sage Drive, or, somewhere else in the area, give us a call. We'll help you find a home that fits your wants and needs.