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Most first-time home buyers are prepared for mortgage payments, but not as many are aware of the other costs that come with buying and owning a home. Here are some unexpected homebuying considerations for potential buyers to think of before buying their first house.
Closing costs can include things like origination fees, underwriting fees, title fees, and appraisal fees. Some closing costs go to the lender, and others help compensate the service providers who play a role in the homebuying and mortgage application processes. Closing costs can add up to a significant chunk of money for buyers, so it’s important to account for them while budgeting.
Houses, especially older properties, may need repairs or upgrades that are not immediately evident at first. There may be unanticipated plumbing issues or windows that need replacing. These issues may prove costly for new homeowners, so it’s important to have a plan for unexpected but urgent repairs. Some homeowners might reach for emergency savings or consider getting a home improvement loan. People with permanent life insurance like whole life insurance can borrow against the cash value of their policy if needed.
Homeowners already know they’re signing up for monthly mortgage payments, but they may not fully understand some of the monthly costs associated with owning a home. There can be utility bills, property taxes, and HOA (Homeowners Association) fees. There may also be maintenance costs depending on the type of house and yard – think of landscaping fees, regular pest control, and professional cleaning. Such costs can make a dent in the family finances, so it’s a good idea to prepare by budgeting for them. Buyers can also talk to real estate agents or neighbors to get an idea of the monthly cost of owning a home in that neighborhood.
Packing and moving, new appliances, furniture, and many other expenses can all be part of setting up a new home, and the costs add up quickly. These are one-time expenses so homeowners aren’t likely to pay for these services again unless they upgrade or move – but they can still be expensive, and especially impactful to homeowners who haven’t planned for them. Research and creative budgeting can prepare homebuyers for one-time set-up costs. It may also help to delay any expenses that aren’t urgent. For instance, buyers may decide to put off buying a new couch if the old one is still functional, or they may wait a year to upgrade to central air conditioning.
The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value will reduce the death benefit and may affect other aspects of the policy.
Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM) and its subsidiaries in Milwaukee, WI.
Source: Northwestern Mutual
