First Time Buyer? Unexpected Costs!
First Time Buyer? Unexpected Costs!
Never owned your own home before, then be aware of these costs. Property Taxes, Mortgage Insurance, Disaster Insurance, HOA Membership, Lawn & Home Maintenance. Some of these costs can be rolled into your mortgage (escrow account) so that you are paying towards them monthly, but some are costs will be monthly as well as some will be unexpected.
Property Taxes
As a homeowner, you’re expected to pay yearly property taxes such as county, city, school and sometimes water districts. The taxes are based on the current value of your home and are assessed yearly by the County Tax Appraisal District. This is one of the items you can escrow with your mortgage company or you can pay directly to the County. Remember to ask your realtor to add this to your Net Sheet so that you know an approximate amount that your taxes will add to your mortgage.
Mortgage Insurance
If you are not putting down less than 20% on the home you are buying, your mortgage company will require you to have Private Mortgage Insurance (PMI) PMI is the mortgage company’s insurance that if you do not pay your loan and default they will still be able to collect on their loan. PMI is an annual charge and will cost between .5% and 1% of the entire loan amount. This is usually a monthly payment added to your monthly mortgage payment.
Disaster Insurance
This is an insurance that you might need to carry over and above your regular homeowners insurance, which you have to protect your property (i.e. plumbing issues, roof leaks, theft, etc.) Disaster insurance is for areas that are prone to natural disasters, such as floods, tornadoes, earthquakes or hurricanes. Please be sure and check the costs of this insurance because it can be quite expensive.
HOA Fees
Living in a neighborhood with a Homeowners Association usually adds to the 
neighborhood with community amenities such as, pool, clubhouse, etc. If you live in a condo, it sometimes covers some of the utilities as well as the outdoor amenities, and outside maintenance of the building. These fees are normally mandatory and can be quite different depending on the neighborhood. Please check with your realtor before purchasing to find out what the fees are and what they cover. These fees can be put in escrow or depending on the HOA paid monthly or yearly.
Home Maintenance
Things to consider when buying a home is that the maintenance will now be your responsibility. Appliance repairs or replacement, windows, roof, plumbing, electrical and anything that can break or needs to be updated in the home is now your responsibility to replace/repair. Basic upgrades can be planned and paid for as you can afford, but repairs will need to be done immediately for the quality of life as well as the value of your home. The average is to plan 1% of your home’s worth to go towards yearly maintenance of your home.
Landscaping and Lawn Care
Unless you have moved into a neighborhood where the HOA pays for outside lawn maintenance this to is now your responsibility. If you like the outdoors, you may want to add a deck, patio, outside furniture, etc. All these things can be planned for as well, but just like maintenance of the home, maintenance of the yard cannot be put off. Landscaping upkeep, as well as lawn maintenance, can be expensive. You can cut the costs by doing it yourself but remember you will have to buy the appropriate tools to get it done. Items you might need include a lawn mower, rakes, snow or leaf blower, yard tools, shed, and any other items needed to keep your yard looking great year-round. 
Talk with your realtor about the unexpected costs of home ownership. You will be better prepared after closing to keep up with the bills and still enjoy your home. There are plenty of benefits to home ownership as well. Realtor Girl Talk will blog about that next week. So don’t be afraid to buy a home, just be ready for all the Unexpected Costs.
