Y
ears of saving away finally paid off, and you’re moving forward into the next transition of your life—purchasing your first home. Buying your first home can be a thrilling experience.
What most first-time buyers don’t realize are the extra expenses that come along with owning your own property. Just because the calculator says you can afford a home doesn’t always mean you can.
The price of homeownership is made up of recurring expenses that aren’t always obvious. One way to tackle this problem is to create a monthly budget. Check the expenses listed below against your income before purchasing your first home.
Calculate Your Mortgage Payments
If you cannot buy the home outright, then you should apply for a mortgage loan through a bank or a mortgage lender. To qualify for a home loan, you must have good credit, history of paying your bills on time, and a maximum debt-to-income ratio of 40-50% (depends on local real estate market). Your monthly payments depend on how much you borrow, the interest rate, and the allotted amount of time to pay off the loan. For a borrower to get an idea of how much they can afford monthly, it is critical to calculate their debt-to-income ratio. Lenders will not approve of a mortgage if you are not able to make the payments. Keep in mind, the best way to pay less altogether is to pay down the principle as quickly as possible.
How Can Homeowners Insurance Protect You?
Your new home will be one of, if not the most valuable, assets you have. Homeowners insurance will help to protect your investment, your belongings, and most importantly, you. A standard homeowner’s policy provides protection to costs in numerous ways:
- Home: If any attached structures (garage or deck) or detached structures (fence or shed) become damaged. If your home is uninhabitable (from fire or other covered risk) coverage may help pay for increased living costs, such as hotel bills.
- Personal Property: Certain belongings that are stolen or damaged like furniture and electronics.
- Family and Guests: Liability coverage will protect you or family members if found at fault for damage to another property or injuring someone. If a guest is injured at y
our home, guest medical protection may help pay their medical bills.
While homeowner’s insurance will not prevent damage, it will offer a financial safety net should the unexpected occur.
What is Property Tax?
This tax is usually based on the value of the full property and is assessed by the municipalities. It is in place to pay for repairing roads, building schools, or towards the police and fire departments. Each state and local governments periodically recalculate the costs—it is important to ask your seller what the tax laws are of your new locality.
Get a Home Inspection
Before the purchase of your new home, it is critical to have an inspection done on the entirety of the property. Any problems found early on can save you a great deal of stress and aide in the final decision. What to look out for are listed below:
- Poor drainage around structure
- Out of date roofing material
- Faulty wiring
- Year the house was built
- Heating/Cooling defects
- Inadequate ventilation and insulation
- Issues with plumbing
- Potential environmental problems
That does not include everything to be inspected, but as a homeowner you should be aware of what you can look out for before you have your professional inspection. Even with the flaw(s) discovered and you are still highly interested in the property, you should use it to your advantage and negotiate a price reduction.
Remember, staying under
budget when purchasing your first home gives you extra cash to add upgrades or décor to your liking. These are not every single expense to expect, but they are some of the most important—and costly. If you would like to know more about homeowner’s insurance, make sure to contact us. At TJ Woods, we want to give you the best insurance plan to help protect you and your family’s future.
