Your Guide To Budgeting For A Home

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Homebuying Budget Breakdown

Getting your finances ready to apply for a mortgage is important in the homebuying journey, but it’s only the first step in your budgeting process. Here are other costs to consider when planning to buy a home:

Upfront Costs

Down Payment: For a conventional loan, the minimum down payment is 3 percent of the home’s price. The average down payment on a home is 12 percent, according to the National Association of Realtors. The average is 7 percent for first-time homebuyers and 16 percent for repeat buyers.

Closing Costs: Depending on the cost of the house, the loan type and lender, closing costs vary from as low as 1 or 2 percent of the purchase price of the property to as much as 15 percent. On average, buyers should expect to pay between 2 and 5 percent of the home purchase price.

Escrow Accounts: Lenders usually require that property taxes and insurance costs get included into monthly mortgage payments. Those payments are placed in escrow until the payment is made by the lender.

Prepaid Interest: These are charges due at closing for any daily interest that accrues on your loan between the date you close on your mortgage loan and the period covered by your first monthly mortgage payment.

Moving Expenses: A local move can range from $300 to $1,500 depending on the move’s size. Long-distance moves can cost on average $2,500 to $5,000 depending on the move’s size, distance and other costs such as moving insurance.

Utilities, Cable and Internet: Sometimes companies require a deposit or the payment for the first month upfront.

Once You Get the Keys

Changing the Locks: Since you don’t know how many keys the previous owners gave out, it’s best to get your locks changed when you move-in. Expect to pay $80 to $300 per lock and up to $200 more for professional installation.

Cleaning: Whether you’re buying cleaning products yourself, paying to have the carpets cleaned, or hiring a professional cleaning service, it’s best to budget for it.

Painting: If you plan to paint, it’s easiest to do it before moving all your stuff in. If you hire a painter, the job can be done quickly, but it’s more costly than buying the supplies and doing it yourself.

Repairs: If you didn’t negotiate to have repairs done that were found during the home inspection, you should budget to get the more important repairs done once you move in.

Furniture: It can be expensive, especially if you need to furnish multiple rooms. Save for it before you move in, or buy a little at a time so your budget won’t be overwhelmed.

Window Treatments: Sometimes houses include window treatments, but not always. Curtains might not be your thing, but you probably want the privacy that shades or blinds provide.

Appliances: Sellers usually leave the kitchen appliances but might take the washing machine and dryer. Even if they leave it all, you might want a different microwave or a better dishwasher. New appliances can be costly.

Recurring Costs

Home Insurance and Real Estate Taxes: Homeowners insurance is often rolled into an escrow account for payment, along with your property taxes. Typically, you will be required to provide two months of real estate taxes to the escrow account at the time of closing so there is enough to pay your taxes on time.

HOA Dues: If you are in a neighborhood with a homeowners association, you probably will need to pay dues. Depending on the HOA, they will be due monthly, quarterly or yearly.

Wyndham Capital can get you started on your homebuying journey today! Reach out to one of our loan officers to learn more about getting pre-approved and check out our Homebuyer’s Guide for additional resources.

Trey started in the mortgage industry in 2009 helping grow a regional lender with 150 employees to one of the nation’s 10 largest retail mortgage lenders. In this position Trey lead marketing technology innovation for sales enablement and the digital borrower experience for borrowers, loan officers and real estate agents. He joined Wyndham Capital in October 2019 to lead Marketing. His strategy of developing emotionally engaging content, tools and applications for loan officers, marketing automation and unique branding has delivered remarkable results. Since starting at Wyndham Capital, Trey has grown the marketing pillar into an internal agency focusing on three core marketing practices: brand marketing, digital marketing, and sales enablement. Under Trey’s guidance, Wyndham Capital works toward being known as the prototype for the future modern lender.

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