Show me the money!
When buying a home for the first time or you have bought and sold a thousand times before. I smart buyer knows their budget. The constraints of your budget are unavoidable. Some buyers hit it big on stocks many have not. You may be a cash buyer or like most you finance your home keeping more money in your pocket. And why not with current interest rates at historic lows it actually pays to finance.
I will try to keep it simple.
Know your budget.
How much down payment you can afford? Under 20% will require PMI (Private Mortgage Insurance) PMI is .5% to 1.5% of the cost of the home. Once 20% has been paid that PMI goes away or I should say be sure to tell the mortgage company to drop the PMI. On a separate note if you are the type of mortgagee that pays a 100 or 200 over each month be sure to tell the mortgage company to apply the extra to the principal NOT the interest. Some banks need to be told so keep that in mind.
Timing and planning. Some moves are sudden, job driven, no matter the cause, time is money and planning your move can save you money.
Say your budget is 500,000 – 10% down or $50,000
Real Estate Attorney 800.00 to 1,200.00
Home Inspection $300 – $1000 Depending on the size of the property typically around $500 is to be expected.. approximately.
Tank Sweep or In Ground Oil Tank Sweep Some sellers kept track from when they purchased the home. It is always best to expect to spend a few hundred on a Tank Sweep.
Moving some buyers forget to incorporate or even shop and have the moving company lined up. When it comes to moving, prices and availability vary so start looking now. Moving companies do have lead times so coordinating is key to a smooth moving transition.
Known unknowns. You may like a property that needs a structural engineer inspection. These can get more expensive. A few hundred for a licensed Structural engineer inspection. Rarely needed, but again.. known unknowns.
So outside of the down payment if you have 5,000 set aside that should cover everything with some left over.
Are you renting a u-haul and moving yourself? Can you get away with under 3,000 for total expenses. .. Attorney, inspector, CO (Certificate of Occupancy, usually only for short sale buyers) You sure can.
One time Home buying Expenses (all calculations are approximate)
- Attorney – 850
- Home Inspection – 500
- Tank Sweep – 250
- Moving – 500 to 3,000
- Down Payment – 20% ideally
- Closing Cost (vary depending on mortgage program)
- Known Unknowns – Chimney and or Pool Inspection, Structural Engineer,
- Initial Changes – Painting or putting up shelves, a piece of furniture or 10
These are the typical one time expenses you should keep in mind.
Typically you want to buy only one home, have one inspection and need one attorney for one transaction. However if for any reason a deal falls apart the home inspection cost is per home address, per inspection, so on your second attempt for a different house you would have to pay again for another home inspection and possibly the attorney fees as well. Remember to ask your attorney about these conditions.
You now have an understanding of home buying expenses. You should also read my Mortgage Referral Post. I cover things like Mortgage company, shopping, locking rates and some insight to closing day property tax surprises.
I am here to help. It is my job to package our offer leveraging all data available to bring us an accepted offer leading us to a successful closing and smooth home buying transaction while always keeping your financial position and personal information confidential. I look forward to working with you.
These numbers hypothesised the expenses of buying a home in NJ so where does that leave considering your monthly budget once you are moved in? Mortgage(taxes are typically included with the mortgage payment). Utilities: Natural Gas, Electric, quarterly sewer fee, home warranties(cover appliances, heaters, ac units, water lines, gas lines). If you choose to add these after you move in for piece of mind they end up being an extra 20 to 50 bucks a month maybe more. I have forgotten what warranties I have and really do need to review and update them.
Anyway Utilities and Homeowners Insurance
Homeowners Insurance – 250 to 2500 Approx.
Water – 50 to 300 Approx.
Gas – 50 to 250 Approx.
Electric – 50 to 300 Approx.
Internet access – 50 to 300 a month (this should likely cover streaming costs as well, although streaming is a huge expense in and of itssself.
PMI – (Private Mortgage Insurance) .5% 5o 1.5% of cost of home
Sewer bill quarterly, each county is different but most all do have a seperate bill that goes out to every resident. Ours was about 150? 134$ I think? Something to add to the budget.
Keep in mind Homeowners and Utilities will all vary depending on plans and usage. But they are expenses you need to account for.
Personal Expenses – Phone, Personal, Entertainment, Travel, Food, Auto insurance,
I will be posting a helpful excel spreadsheet to use for calculating expenses and will embed for download to this page in the coming days.
I really hope this information has been helpful.
Call me with any questions. I am here to help, no obligations.
Greg Mrozak 856-332-5747
RE/MAX SELECT 908-233-9292