Budgeting for your first home purchase

Tuesday March 19, 2013

So, you’ve gotten your financial situation in order and are ready to buy a house. Do you know how much house your monthly budget can handle?

Budgeting for your first home purchase
You’ve probably used a mortgage calculator to get an idea of the price range in which you should be looking. While that might give you a very rough idea of the homes you should consider, it shouldn’t be the only budgeting you do.

In addition to your down payment, there are other expenses to consider, both at closing and after your moving truck pulls up, including:

— The upfront cost of a home inspection ($300 to $400).
— Closing costs, including appraisal, loan, title and lender fees. The average closing cost on a $200,000 mortgage is $3,754, according to Bankrate’s annual survey of closing costs.
— Monthly homeowners-association fees.
— Moving costs.
— Maintenance costs; credit counselors suggest putting aside 1% of your home’s value annually to make needed repairs.
— Higher utility costs.

The bigger gas, electric or water bills that come with a home often take new homeowners by surprise. Call your local utility company before you buy to get an idea of what the average bill is in your area.

Credit counselors also suggest that before you purchase, you practice making mortgage payments, transferring the difference between your current rent and the expected mortgage bill into savings.

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