The key cost which you probably have already factored into your calculations for purchasing a home is the cost of your mortgage plus interest. But in order to figure out how much home you can afford, you also need to account for other ongoing costs of owning a home.

Hopefully, you have already done this. But just to help you double-check, the list below includes common costs associated with homeownership which new homebuyers sometimes neglect to account for.

Buying a Home in Florence, AL

  1. Private mortgage insurance (PMI). If you plan to put a small down payment on a home, there’s a good chance that you will need to purchase private mortgage insurance. This is a monthly cost which you will be responsible for either until it expires (because you have accumulated sufficient equity) or you refinance to a different type of home loan. With a large down payment (i.e. 20%), you probably will not need to concern yourself with PMI.
  2. Property taxes. You will owe ongoing property taxes on the home you purchase. The factors which impact how much you will need to pay include your local tax rate and the value of your home. That means that property taxes can range quite a bit, and you will need to do the math for the home you are thinking about purchasing to calculate this expense.
  3. Utilities costs. If you have previously resided in an apartment, it is likely that your water, power, trash and recycling were all factored into your monthly rent bill. As a homeowner, covering these expenses is up to you, and you will need to calculate each. If you want to keep these costs minimized, consider making solar upgrades to your new home.
  4. Homeowner’s insurance premiums. Just as you may need to purchase private mortgage insurance when you take out your home loan, another possible requirement is homeowner’s insurance. If you have never had either, these products are easy to mix up. But these are two separate types of insurance, with this one protecting the home itself from various types of damage.
  5. Homeowner’s association fees. Depending on the neighborhood where your new home is located, you may need to pay dues to your homeowner’s association. This is a required maintenance payment, just like your insurance and tax payments.
  6. Maintenance and repairs. A home in good condition when you buy it should require less ongoing maintenance than an old fixer-upper, but you still will need to put regular investments into keeping it in pristine condition. As for repairs, those could be minor or major when you buy the home, depending on its condition at the time. You can certainly bank on something breaking or going wrong at some point while you inhabit the house though, so it is wise to have some savings to cover these occasional unexpected bills. Think about upgrading the home too, especially if you plan to stay for a long time. As mentioned earlier, installing solar power panels or other energy efficiency upgrades can save you a significant amount of money. They can pay for themselves relatively quickly, and the longer you stay in the home, the more those savings will add up.
  7. Rental costs. Finally, there are some situations where you might have rent to pay on top of these other costs, even as a homeowner. This would be a common situation if the home you are buying is a manufactured one which will be parked on somebody else’s property.

Ready to Buy a Tri-Cities Home? Contact American Pacific Mortgage

If you have accounted for these costs and have calculated that you can afford them, it may be time to make that first payment on your dream home in the Shoals. As your mortgage broker in the Tri-Cities, American Pacific Mortgage can connect you with the home loan which will save you the most money now and in the future. To schedule your consultation, please call us today at (205) 495-0313.