When budgeting for a new home, so much of the focus is on the down payment and mortgage rate that it’s easy to forget about closing costs. But the last thing you want is to find your dream home, only to realize that you can’t afford it because of costs you didn’t budget for.
Lenders generally recommend that homebuyers budget for at least 1.5 percent of the purchase price for closing costs. This should be considered the minimum, however. A safer approach is to put aside four percent (e.g. $8,000 for a $200,000 property).
And it doesn’t end with closing costs. Once you have successfully purchased your home, you’ll face ongoing expenses unique to home ownership. Below you’ll find a good overview of both types of costs.
Adding up the costs of home ownership can be daunting. It’s always better to be aware of potential costs and have the cash safely tucked away rather than get caught off guard and have to rely on high-interest credit to pay your bills.