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Planning Your Home-Buying Budget?



Here are 4 expenses to remember.

Today’s savvy home buyers will invest some time and planning into the home buying process. There are a lot of financial considerations to take into account. The last thing you want is to spend all of that time looking for the prefect home only to find yourself strapped for cash after you move in. Here are four things that will affect your home’s budget.

The Down Payment

You’re already planning for how much you plan to put down on your new home. The amount of your down payment will affect your monthly mortgage payments in a couple of ways.

  • The larger your down payment is, the less you will be financing, making your monthly payments less.
  • If you don’t have a down payment of at least 20%, you could be required to carry additional private mortgage insurance. In some cases, this could increase your monthly mortgage payment by several hundred dollars.

Property Taxes

They are assessed every six months, and can vary greatly from area to area. They also tend to increase every year as the value of your home increases. Your property taxes will be paid through your escrow account, which you will then pay each month as a part of your mortgage payment.

As you are navigating through the home buying process, you will start to notice the different property tax rates in each area. The amount of your property taxes will directly affect the affordability of your new home.


Homeowners insurance will be a part of your new home’s budget. At a minimum, you will be required by your lender to have the structure and property insured against damage. You can also include your personal belonging and other emergency expenses in the policy. The insurance premiums are paid through your escrow account as well.

Home Improvements

Unless you are extremely fortunate, your new home will probably need a few modifications. It could be something as simple as shelving or as complicated and expensive as drapes or blinds. It’s always a good idea to plan for these expenses ahead of time and have some funds available so you can enjoy your home as soon as you move in. It’s always a good idea to leave yourself a little wiggle-room when it comes to budgeting, especially for things like taxes, insurance, and home improvements, which can fluctuate from year to year. You’ll enjoy your new home much more if you can easily afford it.

Emma Sturgis is a freelance writer based out of Boston, MA. She writes most often on health and education. When not writing, she enjoys reading and watching film noir. Say hi on Twitter @EmmaSturgis2

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