4 Misconceptions About Mortgages

6 Expenses to Include in Your Homebuying Budget

First-time homebuyers are sometimes caught off guard by overlooked expenses, which can create an uncomfortable financial pinch. Be sure you consider these one-time and ongoing expenses.
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1. Home Inspection
For a few hundred dollars, an inspection can uncover potential trouble such as structural problems or asbestos.

2. Home Maintenance
Experts recommend setting aside 1 to 3%* of the home’s purchase price for annual maintenance. For example, you may need to buy lawn care equipment or replace the roof, furnace, or water heater.

3. Taxes And Insurance
Property taxes and homeowners insurance aren’t always included in mortgage payment calculators.

4. Extra Cash At Closing
Your lender should give you a detailed estimate of closing costs. But beyond those, you may have to pay additional expenses, such as a prorated portion of property taxes or homeowners association fees that the seller has already paid.

5. The Move
Whether you hire professional movers for a few thousand dollars or rent a truck, buy boxes and recruit friends to help, moving costs money.

6. Settling In
You may have to pay utility connection fees when you move in, plus utility costs may be higher than you were used to as a renter. Other costs include lock replacements and decorating expenses.

Your Guide to August

 

It’s hard to believe summer is drawing to a close! Soon the kids will be back to school (whew!) and your vacation will be just a memory (aww). But while we’ve still got a bit of summer left, be sure to enjoy it to the fullest with these great upcoming events!

 

August 9 — National Book Lovers Day

Are you always looking for an excuse to drop everything and curl up in a comfy chair with a good book? Then this day is for you! Bookworms across the country, get ready to stock up on reading material, turn off your cell phone, and settle down for a full day of page-turning indulgence!

 Want to support child literacy in America? The Reading Is Fundamental charitable organization has been around since 1966. Learn more and contribute at rif.org.

 

 

August 18 — National Honey Bee Day 


Bees are more than just chubby striped bugs that might sting you. In fact, the health of the entire planet may be affected by the recent drop in the bee population. One-third of the world’s food production depends on bee pollination, and the population of bees in a given area is a strong indicator of that area’s overall environmental health. Here are a few ways you can help save the honey bees:

 

  • Plant flora that bees like. Clover, flowering trees, and blue, purple, and yellow flowers are favorites.

  • Stop using pesticides. A survey of 800 independent scientific studies concluded that the recent alarming bee die-offs were caused, in part, by the use of chemical pesticides.

  • Donate to the Pollinator Partnership. This nonprofit is dedicated to protecting and supporting pollinators around the world.

 

 

 

August 19 — World Humanitarian Day

Every day, humanitarian aid workers help ease the suffering of millions of people around the world. The United Nations created this day to honor the humanitarian workers striving to make the world a better place and to remember those who have lost their lives in conflict.

 

 

 

August 26 — Women’s Equality Day

Sufferin’ suffragettes! Did you know there was a time when women could not own property, sign contracts, or even cast a vote to help shape the country they lived in? Thanks to the suffragettes of the late 19th and early 20th centuries, the 19th Amendment was ratified in 1920, prohibiting voter discrimination on the basis of sex and giving women the right to vote.

 

 

 

August 27-September 9 — 50th U.S. Open

Tennis, anyone? With a new logo and a new stadium, the U.S. Open is celebrating its 50th birthday in a big way! We’re all set to watch the game we love, and it’s not our fault we couldn’t get tickets. Check out this year’s schedule so you don’t miss any of the action.

4 money tips for new homeowners

More than 60% of Americans own their homes, and while there are certain benefits to ownership, there’s also a downside: the cost.
You may have thought that coming up with a down payment was the greatest financial hurdle you’d face, but as you’ll soon come to learn, there are numerous expenses associated with owning a home. Here’s how to handle them.

1. Create a new budget
Given that your monthly mortgage payment is bound to differ from your previous rent payment, it might seem like a no-brainer that you’ll need to adjust your budget accordingly. But there’s more to it than that, because you may find that other costs change by virtue of your new home. For example, if you move from a two-room apartment to a 2,000-square-foot house, you can bet on your heating and electricity costs going up.

Similarly, if you suddenly have a lawn to maintain, you can expect to spend more than you would renting an apartment.

Rather than just substituting your new mortgage payment for your previous rent payment, spend a few months tracking all of your expenses and update your budget to reflect the actual costs of living in your new home. You may come to find that you’re spending more than expected, in which case you’ll need to adjust your flexible expense categories, like leisure, to compensate.estate-clipart-seller_resources_1427834759927
2. Prepare to spend money on repairs and maintenance
You’re probably aware that you’ll spend some money on maintenance and repairs for your home, but you may not realize just how much you may end up parting with. Most homeowners spend 1% to 4% of their homes’ value each year on repairs and maintenance.
So if your home is worth $300,000, expect to shell out anywhere from $3,000 to $12,000 a year on upkeep. And if you need to do something major, like replace a faulty heating system or roof, your costs could climb even higher.

You should therefore aim to pad your emergency savings so that you have funds to tap if a significant repair pops up unexpectedly. Most people need at least three months’ worth of living expenses in an emergency fund, but as a homeowner, you should aim for six months’ worth of expenses or more.
3. Expect your property taxes to go up
Your property taxes are based on the assessed value of your home coupled with local tax rates. When you buy a new home, you’ll be advised of your current property tax liability — but don’t get too comfortable with that number.

Property taxes have a tendency to rise, even when home values drop. Back in 2000, localities across the U.S. collected an estimated $247 billion in property taxes, but by 2010, that number almost doubled to $476 billion despite the decline in home prices from the infamous housing bubble implosion.

Additionally, some localities require property reassessments at certain intervals (such as every year, every other year, or every three years). If your home is reassessed at a higher amount, you could see an instant hike in taxes.

To protect yourself, leave some wiggle room in your budget. This way, if you’re hit with a significant property tax increase from one year to the next, you won’t be scrambling as much to make those payments.
4. Don’t get caught off guard when big payments come due
Some people roll their homeowners’ insurance and property taxes into their mortgage payments via an escrow system. The way this works is that a lender will charge a set amount each month above your mortgage payment alone, put that excess money in an escrow account, and use it to pay your property taxes and homeowners’ insurance for you. But not all mortgages work this way. Many just have you make your exact mortgage payment and remain responsible for paying your homeowners’ insurance and property taxes on your own.

If you fall into the latter category, you’ll need to budget accordingly so you’re not caught off guard when these larger payments roll around.

Most homeowners pay property taxes quarterly, and if yours are $4,000 a year, that’s an extra $1,000 check you’ll need to write every three months. Rather than scramble to come up with that money, be sure to budget $333 a month for property taxes. Along these lines, the average annual homeowners’ insurance premium in the U.S. is $952. If you’re required to make that payment all at once, you’ll need to set aside money each month in anticipation.