There are two types of costs in buying a home — the initial amount you will need for your purchase and the ongoing costs of paying back your mortgage along with monthly operating costs. The largest one-time cost is the down payment. It usually represents 5-10% of the total price of the property.
Typical One-time Expenses
- Loan fees (points, application fee, credit report and appraisal fee)
- Prepaid interest
- Property inspection (optional), due at time of inspection
- Legal fees, due at the time of closing
- Mortgage interest adjustment (if applicable), due at the time of closing
- Title insurance
- Documentary stamps on note.
- Home and property insurance, at closing and ongoing
- Home warranty (optional)
- Moving expenses
Typical Monthly Expenses:
• Mortgage payments
• Maintenance (this could be condominium fees, or allocated maintenance fees)
• Property and content insurance
• Property taxes
• Utilities
Collect the following to prepare your plan:
- Monthly rent or mortgage payments
- Utility payments (gas, water, power, telephone)
- All other monthly expenses (such as food, child care, dues, etc.).
- Annual or semi-annual expenses (such as insurance, car repair, taxes).
- Non-fixed expenses (for example, medical expenditures) for the last year. This will give you an estimate of average expenses of this type.
- Records or an estimate of personal expenses. (entertainment, travel, etc.)
- Credit card statements
- Allow for unexpected items such as medical emergencies, travel and education.
Subtract expenses from income
Could remaining funds be directed towards a mortgage, debts or additional savings? How will a home purchase fit into your budget? Also consider items like insurance, taxes, repairs and maintenance.