If you are thinking about swapping your monthly rent payment for a mortgage, you may already have an idea of where you want to live and how much it will cost. However, there are other expenses associated with home ownership in addition to the monthly payment. Understand all the costs associated with house ownership before you buy, including the initial cost, recurring cost, on-going expenses, and unforeseen costs. Keep these factors in mind to help you estimate the true cost of owning a home and to help you develop a realistic housing budget you can live with.
A list of costs to consider
While home ownership is a big financial commitment, it is also an investment that comes with many benefits. You can decorate and alter your house as you please, while you are building equity, which can be a valuable financial asset. Here are some initial and ongoing costs to be aware of if you are considering buying or building a home.
One-time costs
- Closing costs, such as appraisals, inspections and other services performed by your lender
- Moving expenses
- Furniture, appliances and household tools, which can vary depending on what you already own.
Ongoing costs
In addition to your monthly mortgage payment, plan for these ongoing expenses:
- Mortgage insurance
- Utility costs that may be higher than when you were renting
- Home maintenance and repairs
Furthermore, setting up a budget will help you see clearly where your money goes each month and can also show you how much you can realistically spend as a homeowner.
To assist in paying for unforeseen expenses like sewage, a broken window, or a leaky roof, think about creating an emergency fund. This can assist you in meeting the costs of paying for house repairs without having to withdraw from your savings account or using your credit cards.
The biggest purchase you will probably ever make is a home. However, your house could also be your most valuable possession, and the money you invest in it can help maintain and increase its value over time. NBD has mortgage specialists ready to help you set a plan, identify a solution that works for you, and support you every step of the way.
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