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Thursday, October 6, 2016
A little research can keep hidden
costs from hitting where it hurts most — your wallet!
The unexpected costs of buying a home
a home is expensive, but it’s not just the price of the house itself
that you need to plan for. If you’re considering a new home, BetterMoneyHabits.com can
help you look beyond the sale price to understand and plan for the
extra expenses that come with making this big purchase.
credit score has a big impact on what your mortgage interest rate
will be and how much you will need for a down payment. If your score
isn’t great, you might not even be approved for a home loan.
can check your credit report at annualcreditreport.com,
or by contacting one of the three credit bureaus: Equifax, Experian,
or TransUnion. But if you find you fall into the lower range of
credit scores, it is not the end of the world. Check out these
BetterMoneyHabits.com videos to get back on track:
more you put down on your new home, the better. Ideally, you will
need to put down 20 percent. At that point, you will receive a better
interest rate, have lower monthly payments, and you will not have to
pay for private mortgage insurance, or PMI.
is a type of insurance that lenders require you to pay if you are
unable to make a full 20 percent down payment. This protects them if
you default on your loan. And it’s not cheap. PMI can cost up to
about 2 percent of the total loan amount. PMI is either required up
front, or rolled into your monthly mortgage payment.
some loans, you won’t have to pay PMI forever, but check with your
lender for more details.
you cannot come up with a 20 percent down payment, there are some
alternative options, such as government programs that require just
3.5 percent. For more information, watch Understanding Alternative Mortgage Options.
costs include things like title insurance, appraisals, and attorney
fees. Plan on these closings costs being 3 to 7 percent of the total
loan amount. And remember, this is on top of the down payment.
may come with some unexpected expenses. These could be increased
energy costs, the price of new appliances, homeowner’s association
fees, or even just the expense of maintaining a nice yard. So make sure
you’ve accounted for all these in your budget. And for good measure,
start an emergency fund for those things you cannot prepare for.
Learn more by watching Create a Safety Net for Life’s Unexpected Events.