How Much Money Do You Really Need to Buy a Home in NH?
For most people, buying a home typically means having a monthly mortgage payment, but what other expenses come with the dream of homeownership? In this article, we break down the costs of buying and maintaining a home in New Hampshire, and help you take the first steps toward becoming a homeowner. As a community bank, Union Bank is dedicated to helping New Hampshire residents obtain affordable home loans. Contact us with any questions you have!
What are the costs of buying a home?
- Median Home Listing Price: $247,450 in Littleton, $220,950 in North Woodstock, and $339,000 in Lincoln.
- Down Payment: Depends on the type of mortgage loan you choose and the percentage you can afford to put down. Aside from Veteran Affairs and USDA Rural Development Loans, which offer up to 100 percent financing, the minimum down payment is 3.5 percent based on a Federal Housing Administration loan amount of $200,000. That works out to about $7,000. For the most common mortgage options, you’ll need to put at least 20 percent down to avoid paying a private mortgage insurance premium. That would be about $40,000.
- Private Mortgage Insurance: If you put less than 20 percent down on a conventional loan, you’ll be required to pay Private Mortgage Insurance until you reach the 20 percent equity threshold in your loan balance. With Government loans, the mortgage insurance requirement lasts throughout the life of the loan. On average, you can expect to pay an annual premium (broken into monthly installments) of about one-half percent to one percent of the total loan amount.
- Property Taxes: Calculated as a dollar amount per $1,000 valuation. Keep in mind that your home’s property tax valuation is usually less than what you paid for it. Of the four New Hampshire towns we serve, Lincoln has the lowest tax rate, at $14.58 per $1,000 assessed, and Groveton has the highest, at $33.55 per $1,000 assessed.
- Homeowner’s Insurance: The average annual rate in New Hampshire is $680, 45 percent less than the national average.
- Closing Costs: This is the lump sum paid at closing to cover title searches, title insurance, appraisals, settlement fees, recording fees, land surveys, and transfer tax. The average closing costs for New Hampshire are $4,397.
Once you close on your new home, your monthly mortgage payment will consist of loan principal, interest, and an escrow payment for homeowner’s insurance, property taxes, and if necessary, the Private Mortgage Insurance discussed earlier. Escrow is a convenient service provided by your lender to ensure your insurance premiums and taxes are paid when due, without you having to remember or come up with a lump sum. The loan program will dictate whether or not the borrower is required to escrow.
Costs of Maintaining a Home
- Homeowners Association (HOA) Fees: This cost only applies if you buy a condo, townhouse, or single-family home in a community with shared amenities like snow plowing, lawn mowing, pools, playgrounds, or tennis courts. HOA fees average $200-$300 per month and go toward the expenses and maintenance associated with these shared resources.
- Utilities: Your monthly utility cost may increase if the home you buy is bigger than your current living space. Set aside extra money for spikes in heating bills during the coldest stretch of winter.
- Decorating: One of the most enjoyable aspects of buying a home is making it your own. From painting, purchasing furniture and rugs, and deciding where to hang pictures, there will be plenty you want to do, but try to go slowly and stick to whatever budget you can carve out from your fixed monthly expenses.
- Repairs: The water heater starts leaking; the garbage disposal gets jammed. These kinds of unexpected, need-to-be-fixed-immediately home repairs can get expensive. Start saving for them now, so you can handle the death of your furnace with grace, whenever it occurs.
- Lawn Maintenance: If you are not part of a homeowner’s association and have a big yard, you may not be able to keep the grass cut, the leaves raked, and the snow shoveled by yourself. Hiring a lawn service is convenient but it can also add $100-$200 to your monthly budget depending on the tasks you need done and how often they come.
The cost of homeownership can seem daunting, but you’ll get to know your house and its quirks, how much to expect your heating bill to be in January, and so forth. The best thing you can do is start a savings account that’s just for home maintenance and repairs. That way you’ll be prepared for the unexpected.
Next Steps
If you’re ready to assume the costs of buying and owning a home, the next step is to get your finances in order.
- Check your credit score. You can get a free estimate through apps like Credit Karma and Credit Sesame. Some credit cards also provide access to your FICO score, which is the credit score calculation used by most mortgage lenders.
- If your score is lower than 620, you may want to spend some time getting it higher before applying for a mortgage in order to ensure that you’ll get the best rate and lowest fees possible. Make sure all your bills are paid on time every month and try to reduce your credit utilization to less than 30 percent.
- Don’t apply for other new loans or transfer large sums of money. Lenders want to know where your money comes from, including regular income sources and your down payment. Large transfers into and out of your accounts can be a red flag, as well as new credit applications.
Stay Local. Go far! Union Bank is your local mortgage lender.
The experienced mortgage lending team at Union Bank is here to make your home buying process easier. Our Lenders can answer any questions you may have, help you gather necessary supporting documents, or recommend a local real estate agent or contractor. Because our lenders live and work in the same community, they can put their local expertise to work for you.
Contact a lender, start your mortgage application online, or visit one of our New Hampshire branches in Groveton, Lincoln, and Littleton.