The largest expenditure a buyer has when purchasing a home is the down payment which can range from a minimum required amount of zero for veterans to 3-3.5% minimum for most everyone else. With mortgages come closing costs which can be another 2-4%, mostly connected with the buyer’s mortgage financing, and that cost must also be paid at settlement in cash by the Buyer (unless successfully negotiated in the purchase contract to be covered by the Seller).
Most mortgages require an escrow account to pay the property taxes and homeowner’s insurance premium when due. Generally, the lender will require one to three months of taxes and insurance placed into escrow at closing so those annual bills can be paid before the actual due date.
First-time buyers should be aware that they’ll need this amount of funds available to purchase a home. Unlike tenants who are not responsible for repairs, homeowners also need to be able to cover repairs cost when they arise.
Newer homes typically need repairs less often than older ones. At some point, components like the furnace, air-conditioner and appliances will need to be replaced, which can be a heavy burden if unanticipated. Homeowners should expect between one and four percent of the value of the home in annual repairs. The age and condition of the home and whether some of the items have been replaced will help assess the anticipated expenditures.
|Stove top||13-15 years|
|Water heater||8-12 years|
A $175,000 home with 2% estimated repair expenditures would be $3,500 a year or about $300 per month. Some years it may not run that much and other years maybe more. By anticipating the maintenance expenses, a homeowner is more likely to handle things when they arise.
Another way to handle the risk of unexpected major appliances and mechanical systems repair expenses would be to purchase a home warranty. For $500 -750 a year, warranted repairs or replacements can be handled by the protection plan.
Call me at (316) 337-5154 for a list of trusted protection plans available in our area or for help in determining whether or not a home warranty plan could provide you with good value for the cost.