How You Can Prepare for the Costs of Homeownership
Understanding the true cost of homeownership can be confusing, especially when the real price of owning property is often unclear or feels hidden. Costs can vary, so it’s important to know how much to budget for closing costs and other expenses that may arise.
Understand costs during the purchase and closing processes
Here’s a breakdown of potential costs associated with the process of making an offer and purchasing a home.
Let's say you've found a home and have been approved for a mortgage, but these up-front costs seem overwhelming. You may consider exploring one or more of these sources to help you come up with the money:
- A gift from your family. This can include anyone you're related to by blood, marriage, adoption, or legal guardianship. It also might include spouses, fiancés, domestic partners, children, and other dependents. You’ll want to work with your lender to verify if your loan type accepts gifts to cover fees.
- A grant from a business or nonprofit. This could be from your church or employer(s), municipalities, nonprofit organizations, or public agencies. If you're a member of a Native American tribe, it can contribute as well. Your lender might be able to help you identify other resources.
- A small loan. Some organizations can provide additional, smaller loans to help cover down payment and closing costs. These can have several flexible options, including loans that defer payments (allowing you to pay them later) or even some that are forgivable (meaning you won't have to pay the money back if you meet specific requirements). You'll want to work with your lender to find the best fit for you and to better understand how programs differ.
Figuring out the costs of homeownership after closing
When buying a home, it’s important to plan for more than just the down payment and closing fees. Here are some factors homeowners need to consider when calculating their homeownership costs.
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How to Know If I'm Ready to Buy a Home
Determine if you're ready for homeownership. Learn how to evaluate your credit score, your income in relation to your debt, and other relevant factors.