Money issues don't stop after making an offer and being approved for a mortgage. Wise buyers understand the financial obligations and are prepared for their home closing with money matters well in hand. To find out what to expect in terms of outlay on your closing day, read on.
Home Insurance Expenses
Homeowners insurance is just one of those common pre-closing expenses that nearly everyone has to take care of. Mortgage lenders require it, but no one should take on the risk of going without it. Rates can vary widely even in the same geographical area, so be sure to get quotes from several highly-rated insurers. You will encounter replacement value vs. depreciated value, so know what you need and why. Also, pay attention to add on policy riders and additional policies for events like hurricanes and floods.
Closing Costs
You will need to show that you have a certain amount of funds set aside as part of the due diligence process so don't get caught off-guard. You will be provided with an estimate of closing costs as soon as you sign a contract to purchase the home. Those numbers will get more and more accurate as you are updated and approach the big day. If you are still in the process of locating a home, it might be helpful to go ahead and estimate how much you might need to have on hand. Real estate experts advise buyers to set aside about 2% to 5% of the home's sale price in closing cash. Keep in mind that while closing costs are negotiable, today's competitive market may call for the buyer to pay most if not all closing costs.
Home Maintenance Costs
It might be wise to set aside funds for those unexpected maintenance issues occurring soon after the closing. You don't have to be first-time buyers to overlook this issue but having your air conditioner stop working or your toilet backed up can be an unpleasant wake-up call. The home experts from HGTV tell buyers to expect to spend about 1% to 3% of the value of the home each year on common home maintenance costs like repairs and regular maintenance of the major systems like plumbing, heat, and air. If you plan on having pool service, house cleaning, or yard work done, be sure these expenses go into your post-home budget.
Beyond the above, know that you will also need funds for a professional home appraisal and inspection, too. To find out more, contact a company like Whitson Realty.
Share2 July 2021
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