Many first time homebuyers focus their efforts primarily on saving money for a downpayment.  They don’t realize that there are other expenses involved when purchasing a Maplewood NJ home.  They are then surprised when they are expected to come up with additional money in order to get the home of their dreams.  To avoid any unpleasant and completely unnecessary surprises, here is what you can expect to pay when buying a home:

Downpayment - Of course, you will need to come up with some money to show that you are serious about investing in your Maplewood NJ home.  Most financial experts recommend putting at least 20% of the purchase price down on your home loan.  This will help keep your mortgage payments down.  If you are unable to come up with 20%, there are loan programs that will allow you to purchase a home with less.  Talk to your REALTOR® to determine your best course of action.

Private Mortgage Insurance (PMI) – If you have to borrow more than 80% of the purchase price of your Maplewood NJ home (you put less than 20% down), you have to pay a mandatory PMI premium every year until your principal is less than 80% of the value of the home.  Loan companies require borrowers to pay for this insurance under these circumstances to protect themselves in case you default on your loan.

Property Taxes – These vary depending on where you live and the value of your property.  Check with the local tax assessor’s office to see what you can expect to pay.

Homeowners’ Insurance – This is another requirement by the loan companies for anyone borrowing money on a Maplewood home until they either sell it or pay their loan off.  Think of it in the same vein as when you buy a car.  If you borrow money to pay for the car, you have to have car insurance on it until the loan is paid off.  The same goes for a home loan. 

Closing Costs, Inspections and Other Fees – While some sellers offer to pay closing costs as an incentive for buyers to purchase their Maplewood home, this is not typical.  Closing costs consist of the fees involved in handling the paperwork, recording the title and document fees amongst other miscellaneous fees.  These costs typically run around 2-4% of the home’s sales price.  You are legally entitled to a Good Faith Estimate before the close of escrow that will give you a detailed list of everything involved in the closing costs.  Go over this thoroughly and make sure to ask your REALTOR® if you have any questions.  Also, the buyer is usually held accountable for payment of a home inspection and appraisal.  These typically cost a few hundred dollars.

Don’t be caught offguard by unexpected expenses at the end of your real estate transaction.  Know what to expect to pay when buying a Maplewood home so you can be prepared well ahead of time.  Let me know when you’re interested in looking for your dream home in the Maplewood area.

Francine Lichtman, Real Estate Beyond Four Walls, New Jersey Homes