-- Factor in closing costs. They can be expensive, often running upwards of $3,000, depending on the purchase price and area. To get a rough idea of what yours might be, ask your real estate agent, or take a look at your state's average on Bankrate.com, which released its 2009 Closing Costs Study at the beginning of September. Once you have an estimate, you'll know how much you have left for a down payment. If it's not 20 percent of the loan amount, you'll have to pay PMI (private mortgage insurance) on a monthly basis, which can add $100 or more to your monthly mortgage payment.
-- Consider maintenance, taxes and insurance. Property taxes can really get you, depending on your state. Your real estate agent should be able to give you an estimate. Asking the seller what they paid can be misleading, says Smith. "In California, for example, property taxes are tied to how much you paid for the home, plus an increase of 2 percent every year. If you buy a home from a seller who purchased it 30 years ago, their taxes will be based on what they paid then." You can, however, ask the seller how much they pay in homeowners insurance, and it's a number that can usually be fiddled with a bit, by raising your deductible or shopping around for a lower rate.
As far as maintenance, take a good, hard look at the home inspection. It will alert you to any other major problems coming down the pipeline. You always have to expect the unexpected, and that means socking away money for emergencies. The rule of thumb is to count on spending 1 percent of the purchase price of your home every year for maintenance. But be smart: If you live in an older home or fixer-upper, you should expect to save even more. ?
-- Remember additional fees and expenses. If you're moving to a new city or town, you need to account for a change in your cost of living. That could mean a longer commute, higher grocery costs or uniforms if you live in a school district that requires them. If you're buying a condo or will live in a planned development, you need to ask about monthly fees as well. "They can be as high as an apartment rent -- $500 to $1,000 a month -- and they can change," says Bray. Ask for a history of those charges -- it's standard for the association to hand it over along with the covenants, conditions and restrictions that dictate how they operate and what rules you need to follow. That way, you'll see if they've been increasing each year, and by how much.