The Hidden Costs of Buying A Home
You’ve been saving up for a down payment, and you are finally ready to take the next step. Buyers tend to base the majority of their home-buying budget on their down payment. The next big factor is what their monthly mortgage payment will be. The mortgage payment will typically include your principal, interest, taxes, and insurance. Once these details have been worked out a buyer usually feels confident in going out to search for their new home.
However, there are many hidden costs to anticipate. These different costs may affect your budget and timeline. This is why it is very important to consider these costs early in your home buying process, before you find the perfect home.
Some of the most expensive hidden costs are:
Many times the first additional cost right after going under contract will be the home inspection to make sure there are no major issues with the condition of the home. Depending on the size of the home, it could cost you around $500. Additionally, if you have a sewer or septic located at your new home, those are additional inspections that can quickly add up.
Your lender may require you to pay for the appraisal of your new home up front. This can be a few hundred dollars and is necessary in order to obtain your loan.
Closing Costs and Other Fees
There are many fees that will be a part of closing. If you didn’t pay for your appraisal before hand, this is where you would pay it. There are fees related to making sure you have a clear title to purchase the home. There are also fees related to your loan. You can talk to your lender to get a breakdown of the fees you will be responsible for. On occasion you can try and negotiate with the seller to have the seller contribute to your closing costs; however you should be prepared for this cost.
HOA and/or Condo Fees
Once you’ve bought the home, there are still some costs that may not have been factored into your budget. If you bought a home in a community that has a HOA and/or condo fees these are not part of a mortgage payment. Whether the fee is paid monthly, quarterly, or annually, you will need to factor this amount into your home budget.
Those first few utility bills can come as a big shock to a new homeowner. Many times some, or even all, utilities may be part of a rent payment. Or if you’ve moved to a larger home the utilities may go up as well. Nothing major, but should be considered as you decide what home is right for you.
Maintenance, Repairs, and Renovations
No matter whether you buy a new home or an old, one of the joys of homeownership is always maintenance. On average a homeowner will spend about 1% of their home’s value on maintenance each year. This does not include major repairs that may need to be done. In older homes you may find large expenses such as HVAC systems, plumbing, or the roof that need work. Also, if you purchased an older home you may have renovations you want to do. From painting to new floors, to maybe even new fixtures and furniture. All of these costs need to be considered as you pick out your new home.
Making sure our clients are prepared as they go out in search of the perfect home is one of the many things our buyer agents do during our initial buyer consult. Thinking of buying? Ready to go look? We are here to help! And remember, with us, advice is always free. Reach us at [email protected].