Before you commit to buying a house, it’s important to understand the true cost of buying a house. The selling price is not the only thing you need to take into account.
Down payment. How much can you afford for a down payment? A smaller downpayment may make it easy to make the purchase, but it will increase your mortgage payments. A larger downpayment will save money in the long run, but may make finances very tight during the sale.
Monthly mortgage payments. Larger payments will get the loan paid off sooner, but can make for a tight budget. Smaller payments can be easier to keep up with, but will take longer to pay off.
Closing costs. Closing costs are typically 2-4% of the selling price of the house, which may include survey and inspection fees. This is often covered by the seller, but make sure you know one way or the other before committing to the sale.
Homeowners association fees, lawncare, warranties and utilities. Be sure to budget for upkeep on the property, as well as fees for homeowners’ associations, where applicable. If the new property has features that were not present at your previous house, such as a swimming pool, be sure you budget for the additional upkeep.
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