Think of this scenario: Beth is 36 years old and renters throughout his adult life. For the last two years, he has been living on his own in a three -bedroom rental, which he thinks can be the “forever” house in a neighborhood he loves.
Recently, the host offered him to sell the house and gives him a serious thought. He currently pays $ 2,350 per month and offers to sell the house for $ 450,000.
He spoke to Beth Bank and a 20% drop and a fixed 6.95% interest rate for a 30-year-old mortgage, and the monthly mortgage payments will be the same as the rent ($ 2,383).
Nevertheless, Beth has never had a property and is worried about getting splashing. As Mull, the pros and cons of Mull, he wonders that he cannot take into account all the factors.
Here are a few things that Beth should consider before deciding.
It is common to compare rent payments with the monthly cost of a mortgage, but the ongoing costs of having a home can extend far beyond mortgage payments.
For the first time, for the first time, the budget for the down payment, but neglect or underestimate other costs that should be paid before or at the closing.
In addition to the permission payment, Beth will need to pay other fees to purchase his new home – and closing costs, assessment and supervision fees, relics fees, lawyer fees, service fees and other small administrative costs may increase rapidly. Closing costs usually enter around 2 to 5% According to Zillow, the purchase price.
Having a house will also bring the expenses that Beth is not rented. These include real estate taxes, higher insurance premiums, repair and maintenance and potential host associations or condemnation fees.
Susan Kelleher said, “At the beginning of 2024, after 20%, it was more expensive than renting three of every five subway in the United States. Zoom.
While costs vary from state to state (and according to the type of property you purchased), the average real estate tax invoice in the USA $ 4,380 According to the American Society Research in 2023.
As for the insurance, the average annual cost for tenant insurance (up to $ 300,000) $ 263 According to Sigorta.com in January 2025. Meanwhile, the average cost of host insurance $ 2,601 per year As of March 2025.
There is also a common thumb rule that says that you should leave aside. 1% of your property value Every year for repair and maintenance.
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Although not paid from mobile, there is an opportunity cost to buy a house.
The cost of opportunity is the value you pass using your money to buy a house instead of anything else, and there are both financial and non -financial costs to buy a house.
Beth’s money for down payment – and extra expenses from the host – the money that will not be available for other investments. Some studies, in the long run, houses Historically low performance Compared to the stock market as an investment.
Peter Earle, an economist of the American Economic Research Institute, said, “Stocks have returned an average to 12% per year on average, and the real estate provided a return of 2 to 4% per year.” US news.
One of the biggest non -financial opportunities costs is a loss of freedom. When you have a home, it is much more difficult to switch to a new place (or to a new city or country) and have higher trading costs to do it.
Even when this opportunity costs are taken into consideration, there may be psychological and social benefits to have a home – and Beth may still want to buy one. But he will also want to think about what he can give up and whether he is good.
Evaluating all the costs of buying a house, Beth may also consider whether he is financially ready.
For example, he will probably need a stable source of income such as a safe job or a healthy job, and he will want to pay high -interest debt to improve the loan score and to help higher monthly housing expenses.
Ideally, a beth emergency fund And an emergency situation, disease or disability is hit by insurance to help meet losses in income.
While pursuing permission, the closing costs and the potential that the lender may have a reserve of up to six months for compulsory housing costs such as tax and insurance after the closing should also be taken into account.
USA Ministry of Housing and Urban Development resources This may help homeowners for the first time, but Beth may want to talk to a counselor who can help him create a financial plan that will lead him to the host if he is not ready today.
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This article only provides information and should not be interpreted as advice. It is provided without any warranty.
