You’ve decided to buy a home – congratulations! Before you start your hunt for the perfect home (*cough* a new home can be built to your exact preferences *cough*), make sure you are fully prepared for the costs associated with buying a home. Here are a few costs beyond the principal and interest of your mortgage that you should be prepared to pay.
Closing Costs
Closing costs include things like loan fees; appraisal fees; attorney fees; title insurance; pre-payment of interest, insurance, and property taxes; and more. Closing costs will be less than 3 percent of the amount you borrow. If you build with Liberty Homes, you can reduce or eliminate this cost by simply using one of our preferred lenders, who offer lender-paid closing costs on certain loans.
Private Mortgage Insurance (PMI)
If you will not be putting down a 20 percent down payment, you will be required to pay Private Mortgage Insurance (PMI), which can cost between 0.3 and 1.5 percent of your mortgage, depending on the size of your down payment and your credit score.
Home Insurance
Beyond it being a good idea to insure what will likely be the biggest purchase of your life, your mortgage company will require it. Insurance rates vary depending on where you live, the value of your home, your deductible, the insurance company you use, and more. An insurance broker can help you find the right coverage for you. Most often, insurance costs are included in your monthly mortgage payment as part of your escrow account.
Property Tax
Another cost that can be, and usually is, rolled into your monthly mortgage payment is property taxes. Property tax is calculated on the assessed value of your home and also includes local fees like school funds, bonds, and services such as libraries and parks.
Utilities
If you are moving from an apartment to a home, you will need to budget more money for utilities. A home will use more electricity, gas, and water. Some experts suggest factoring in an extra $3,000 a year for increased utility costs. Want to lower this number? Consider building a new home. New homes are built with newer, more energy-efficient appliances, mechanical systems, and windows, which help lower your overall utilities costs.
Maintenance
You are responsible for general upkeep and repairs on your home, and even routine maintenance can add up over the year. According to HomeZada, homeowners should plan on budgeting between 1 percent and 4 percent of their home’s value each year for maintenance and repairs. The newer the home, the less you will need (another great reason to build new – plus you get a warranty for the first year to help cover repairs). An older home will need require more upkeep and therefore more money.
Homeowner’s Association Fees
If you buy in an HOA community, you will have a monthly fee to pay to the association. These fees vary from community to community and can increase over time (check the CC&Rs for any rules regarding increases, special fees, etc.). Liberty Homes’ current communities, Liberty Cove @ Day Ranch and The Vistas, do not have an HOA, so that is one less expense you will need to budget.
Other Miscellaneous Expenses
While the above seven items are the big costs to consider when buying a home, there are other expenses that may pop up. For starters, moving expenses. If you have a lot of stuff to move and/or don’t want to rely on friends, you will want to factor in the cost of movers. Another potential added expense is commuting. If you moved farther from your office, there will be some additional expenses associated with your daily commute. Home decorating may also come into play, not just because you want new furnishings or décor for your new home but also due to needs in your new space.
Ready to build your dream home? Liberty Homes can help! We have been building new homes in Utah for more than 25 years. We take pride in our trade, crafting each home as if it were our own. Our quality, affordable homes are energy smart and thoughtfully personalized for your active Utah lifestyle. We currently have new single-family homes available in Bluffdale and West Valley. Contact us today to get started building your new home.
