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The Realities of Owning a Home: Recurring Costs

The Realities of Owning a Home: Recurring CostsHome ownership is one of the biggest goals in one’s life. However, more goes into home ownership than simply paying a mortgage each month. In fact, there are some other recurring expenses that can put you over your budget if you don’t plan accordingly. In this article, we’re going to cover some of the most common monthly expenses that you can plan for if you’re in the market for buying a home in the near future. Most importantly, protect your new dwelling with a tailored New York Home Insurance policy.

Mortgage loan.

This is the most obvious, and will vary in cost depending on the home’s price, how much you put down, and your interest level that you work out with your lender. If it’s a fixed loan, the price will remain the same over the life of your mortgage loan terms. Otherwise, an adjustable loan changes as your benchmark changes.

Insurance.

According to the Insurance Information Institute, the average annual U.S. homeowners insurance premium was $1,132 in 2014. However, homeowners insurance premiums can vary from year to year based on changes in your home’s appraised value, your policy’s deductible and coverage amounts, your claim history, and your credit score. As with property taxes, you pay one-twelfth of your annual homeowners premium with your monthly escrow payment, says Money Crashers.

Private mortgage insurance.

If you put down less than 20% of the home’s price in your down payment, you’ll need to pay an additional monthly expense for private mortgage insurance (PMI).

PMI protects your lender from financial loss if your home is foreclosed upon and sold at a discount relative to your purchase price. If you have good credit, your lender may assess PMI premiums until your loan-to-value (LTV) ratio (the ratio of your current mortgage balance to your home’s total value) reaches 78%. However, lenders generally honor borrowers’ PMI cancellation requests once LTV reaches 80%. If you pose a higher credit risk, your lender may require you to carry PMI until your LTV is lower.

Property taxes.

Depending on where you live, your city’s property taxes will vary each year. You will typically pay 1/12th of the total amount each year.

Utilities/maintenance.

Finally, you’ll need to factor in costs for utilities. Everything from water, gas and electricity to phones, internet and cable are recurring monthly expenses you’ll need to budget for. In addition, monthly maintenance is another factor to consider. For example, lawn mowing, appliance maintenance, and plumbing repairs are all the responsibility of the homeowner.

About AJ Benet Inc. Insurance Agency

At AJ Benet Inc. Insurance Agency, we make sure that your New York Business Insurance policy includes more than the simple general liability and product liability. Our policies extend in cases where you underlying limits are exhausted. Our team of experts are willing to go the extra mile and not only protect your business but understand it. For more information, call us today at (914) 381-2040.

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