The Real Monthly Expenses of Buying a Home

Before you buy your first home, make sure that you’re researching the entire complement of monthly expenses that you will have to cover. Some of these are fees that many people don’t know are attached to their home payment.

You may know about your mortgage costs – the monthly amount that you pay back to your lender that includes the amount you borrow, plus the percentage of interest you have agreed to. This is what most people look for when they look to see how much a home will cost them. If it were just that, then they would have a good idea of their home’s monthly cost. However, there are more unavoidable expenses.

Property tax is calculated every year and added to your overall home expenses. Unless you prefer to pay a lump sum every year, you will want to add this to your regular monthly payment. Property tax is determined from the value of your home. The appraiser may value your home above or below what you paid for it. If you think that your home has been evaluated too high, you can appeal the amount of tax – at your own expense.

Mortgage insurance is something that some people don’t think of when calculating the amount of money they need to spend on a home every month. This is a percentage of your loan that you pay if you are borrowing more than 80% to most lenders, which covers the insurance costs of the policy that protects them – not you – if you default on the loan.

Another expense is home insurance, which covers theft of or damage to your home and/or its contents. This is available through a number of insurance companies, so shop around for the best price. This can be a monthly or yearly expense, but many people prefer the monthly due to the relatively small amount laid out every month. However, you may want to see if there are any discounts if you pay in a lump sum.

Maintenance and repair are now your responsibility, so while you may not see anything wrong with your new abode, you should be putting away a sum to cover emergency repairs and big replacements, such as the roof or major appliances. Things like this have a way of surprising one when nothing has been done to prepare for their inevitable arrival.

So, has your payment just ballooned by several hundred dollars? It’s not surprising if it has; random fees and expenses can add up! It’s best to be prepared and to discuss how much you can really afford when you take all the attendant fees into consideration.

Justin Havre

DISCLAIMER: Neither Indiana VA Mortgages ( nor NEO Home Loans is affiliated with any government agencies, including the VA.