Choosing A Better Insurance Plan

3 Additional Expenses To Keep In Mind When Buying A Home

by Isabella Torres

Buying a home for the first time can be both exciting and scary at the same time. You are making a huge investment, which means there are going to be a lot of decisions you're going to have to make. One of the primary decisions revolves around how much you can afford to pay for a new home. If you have a down payment of at least 20 percent, you are off to a good start. However, there are other things you'll need to pay for as well.

Here are three additional expenses to keep in mind when buying a home.

Closing Costs

After the transaction of buying your home has been completed, you will have to pay something called closing costs, which covers the following fees:

  • Application fee
  • Appraisal
  • Home inspection
  • Property tax
  • Survey fee

There are usually many other types of fees that you will need to pay as part of your closing costs. Typically, this expense will equal between 2 and 5 percent of the purchase price of your home.

Homeowners Insurance

You will want to protect your home, and if anything should ever happen to it, you're going to need a way to pay for it. This is where homeowners insurance comes in. This type of insurance typically covers the following:

  • Damages incurred to your home because of fire and smoke, wind, lightning strikes, and hail
  • Damage to other structures on your property, such as the barn, a shed, or detached garage
  • Reimbursement for the cost of damage or theft of personal property such as clothes, furniture, and electronics

Something else that homeowners insurance contains is called liability coverage, which covers things like medical expenses in case someone gets injured on your property. The average cost for homeowners insurance usually ranges from $300 to $1,000.

Property Taxes

The amount of property taxes you will pay gets determined by an assessment of the value of your property. These taxes provide funds for schools, libraries, fire departments, road construction projects, and the salaries for staff members of your local government. Property taxes can usually be paid as part of your mortgage or you can pay them semi-annually or annually. Some local tax authorities also accept monthly payments.

By understanding that you will need to pay the closing costs after completing the transaction for the purchase of your home, and that you'll be responsible for homeowners insurance and property taxes, you will be able to budget for all the expenses that are involved when buying a home.