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The first year of homeownership: three costs you’ll need to cover

Read time 1 minutes

For would-be homeowners, it’s easy to become hyper-focused on the mortgage payment. After all, it’s the one big expense you can always count on. But what many first-time buyers don’t realize is that the first year of homeownership comes with a few other surprises (and we don’t mean your new neighbors).

The good news is that, with a little planning, you’ll be able to cover these additional costs of purchasing a home:

Closing costs

Before the purchase is final, you’ll need to deal with closing costs. These include miscellaneous fees for attorneys, titles, surveys, inspections and more. Typically, they range from 2 – 3% of the price of the home, and aren’t included in your down payment.

Mortgage and/or homeowners’ insurance

Homeowners’ insurance covers you in case anything should happen to your property. It’s important to note that natural disaster coverage typically isn’t included in insurance plans. But depending on where you live, you may want to add flood or earthquake coverage for peace of mind.

Additionally, if your down payment is less than 20% of the home’s value, your lender will probably require you to purchase mortgage insurance. This way, it stays protected in case you default on your loan.

Furniture

Unless you plan on using sleeping bags or dining on the floor, you’ll need to budget for new furniture. You may plan on bringing your current collection of couches, tables and appliances, which will work… unless your new home is bigger (in which case, you’ll want to fill out the space). In the event that the seller is including their furniture in the sale, make sure it’s in good shape.

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