The Redmond Group

Legend Home Lending

  • Home
  • About Us
  • Blog
  • Mortgage Info
    • First Time Home Buyer Tips
    • First Time Home Seller Tips
    • Home Appraisal
    • Home Inspection
    • Loan Checklist
    • Loan Process
    • Mortgage Glossary
  • Pre-Qualify Now
  • Contact

Budgeting for a New Home?: 3 Unlikely Costs to Consider in Your Overall Budget

April 5, 2016 by Joel and Jodi Redmond

Budgeting for a New Home? 3 Unlikely Costs to Consider in Your Overall BudgetIf you’re planning to buy a new home in the near future, you’re probably working hard to prepare a budget and determine how much you can afford before you start viewing homes. While it’s good to have an idea of what you can pay for a new house, many buyers routinely miss several key home buying costs that can later cause a variety of problems. Before you start looking for your new home, make sure you add these three commonly forgotten costs to your budget.

Title Insurance: Critical Protection Against Title Claims

Title insurance is something that most buyers forget about until closing, but it’s a necessary form of protection for every soon-to-be homeowner. Title insurance provides you with protection against financial losses in the event that you later discover title defects. For example, title insurance can protect you from losses in situations where the seller doesn’t actually own the home, where there is a lien on the property, or where a previous owner accidentally omitted or deliberately falsified critical property records.

In a standard real estate contract the seller will pay for the buyer’s title insurance, but in most states, the buyer is also required to buy title insurance to protect the mortgage lender. Title insurance for lenders usually costs, on average, $2.50 per $1,000 of assessed property value.

Unexpected Renovations: Home Inspectors Aren’t Perfect

Typically, your home inspector will alert you to any issues requiring renovation or repair before you buy your new home. But if your home inspector is negligent and misses a critical problem with the home, you may need to find money for surprise renovations – and fast.

While you can file an insurance claim or sue the inspector for negligence in order to recoup damages, court cases and insurance claims take time – time that you may not have if you’re facing an urgent home problem. Most real estate agents suggest budgeting 1% of your home’s budget each year for maintenance costs.

Initial Interest: Your First Month Comes Due Before You Know It

Your mortgage starts accruing interest on the day you close the home sale, not on the day you move in. So in order to make sure that you have a consistent payment, the lender collects the first partial month of interest at the closing table.  It’s called “prepaid interest” and is included in your overall closing costs.  That means if you sign the contract on March 15, you’ll need to make an interest payment for the period of time lasting from March 15 to March 31 at closing. Your payment will then come due on May 1 – so be sure to include your first interest payment in planning for your closing costs.

Buying a home isn’t cheap. But when you clearly understand the various costs involved, it’s easier to plan your home purchase and budget for expenses, both expected and not. Contact your local mortgage professional to learn more about home buying costs.

Home Mortgage Tips Tagged: Home Mortgage Tips, Mortgage Tips, New Home Budget

Joel and Jodi

Contact Us


Call Us! (281) 218-6848
Legend Home Lending
Joel NMLS #231806
Jodi NMLS #231807
Legend Logo

Connect with Me!

PRE-QUALIFY →

Let’s Keep In Touch!

  • This field is for validation purposes and should be left unchanged.

Quick Links

  • Get A FREE Rate Quote!
  • Accessibility Statement
  • About Us
  • Contact

Looking For Something?

Equal Housing
Legend Lending Corporation • NMLS # 229421 | NMLS Consumer Access | Privacy Notice | Texas Recovery Fund Notice

Legend Lending Corporation, NMLS 229421 is an equal opportunity lender.

Archives


Joel & Jodi Redmond
17047 El Camino Real
Suite 150
Houston, TX 77058

Copyright © 2023 The Redmond Group  ·  All rights reserved   ·   Log In