Apopka Florida Homeownership Expenses and Budgeting
A common challenge for first time home buyers is properly budgeting. Owning a home is much different than renting and most don’t know what they don’t know. If you’re in the market for your very first home, here are some tips on Apopka Florida home ownership expenses and budgeting to keep in mind.
Up-front Home Purchase Expenses
Expenses Prior to Closing
There are several up-front expenses that will be due before the actual closing. When entering a contract to purchase a property, you must provide a deposit. This is known as good faith money. It is held by the seller’s agent or attorney and will be credited back to you at closing. Additionally, you will be paying for a home inspection and appraisal.
Funds Due at Closing
At closing, you must provide funds for your down payment, closing costs, and pre-paid expenses. Your down payment is typically a percentage of your purchase price. For FHA home loans, most home buyers choose to make the minimum 3.5% down payment. Putting down 20% or more on any loan allows you to avoid the extra expense of mortgage insurance.
Closing costs are fees charged by your lender. Fees can vary based on the lender, specific loan program, and loan amount. By law, your lender must provide you with an estimate of these fees when you first apply for the loan. Reviewing fees is also helpful when comparing lenders or loan programs.
Pre-paid expenses include property taxes, insurance, and similar costs. The amount due often depends on when you close and when the next bill is due. Funds are placed into an escrow account on your behalf so that they are available when bills are due. Additional escrow amounts for these items are typically included with each month’s mortgage payment.
First time buyers often make the mistake of estimating closing costs, but pre-paid expenses are equally important and do not fall under the “closing cost” grouping even though they are also paid at closing.