Buying your first home can be an exciting time, especially if you are looking forward to finally owning a home of your own and no longer putting money into the pocket of your landlord after renting for so many years. However, first time homebuyers often look at the benefits of buying a home and forget that there are some hidden expenses that they need to account for. When planning for your very first home purchase, take ample time to learn about those hidden expenses and then learn how to budget for your home so that you aren’t confronted with unexpected costs that you now can’t afford.
Looking on the Bright Side
Before getting worried about all those expenses you hadn’t counted on, take a moment to think of the major benefit of owning your own home. There will be equity in your property as you begin paying it off month after month. Even if you should need to refinance at some point, you will have built equity that can be used to secure a home loan, even with less than perfect credit. For example, you can apply for bad credit mortgages, if your credit history is less than perfect. That’s the bright side after you own your home however. Before that, you need to budget so some well-placed advice might help you get there.
Other Costs Involved
Some first time homebuyers make the mistake of thinking that a mortgage payment that is only slightly higher than the rent they’ve been paying should be manageable. Unfortunately, they are not accounting for such things as insurance, taxes, upkeep and repairs. There is no getting around the tax man so you do need to pay taxes at the time of sale and property taxes each year. Then there is the sometimes high cost of property insurance. Most, if not all, lenders will not even consider giving a home loan unless the property is fully insured. Basic liability is a must in the event that someone is injured, from a fall for instance, and wants to file suit. Then there is cover for acts of nature such as floods, wind and fire. Insurance doesn’t come cheaply and it is a must, so that surely needs to be included in your budget.
Maintenance and Repairs
Giving money every month for the mortgage repayment and insurance doesn’t stop there. When you rented, chances are your landlord did routine maintenance and repairs. These would include upkeep on the grounds, even if you had to mow the lawn, dig out weeds, prune shrubs and other routine maintenance on the property that you probably will pay someone to do for you. These costs all add up so that slightly smaller payment you had counted on has suddenly grown by sometimes half again what you’d counted on!
The best thing to do when planning to buy a home is to itemise all those expenses you hadn’t factored in, list all your other expenses and then balance that against your income. If those payments are even close to what you are making, perhaps you should save for a bit longer or find a home that costs less but will suit you well. There is always a way, but first comes your budget.