The price you see on a home listing is never what you’re actually going to pay in total. First time homebuyers are always surprised at all of the additional expenses included in the process. Allow yourself to budget more accurately and not be caught off guard by knowing about these hidden costs before buying a home.
A home inspection is usually required by lenders and provides a thorough examination of the property. A written report is completed assessing the condition of the home and any hazards that are visually evident. If this report is not required by your lender, it is smart to have one done anyways so that you can avoid maintenance or repair costs further down the road. If it is found that the house requires a lot of maintenance, you may even be able to renegotiate the contract for a lower price. Inspections usually cost between $200 and $300 but depending on the age and condition of the house can be up to $1,000. While inspections can be expensive, it is better to be safe than sorry! Read more about what to expect from an inspection as a buyer here.
Some lenders also require a professional survey of the property. A survey shows the property’s boundary lines as well as the location of features such as the garage and pool. It is mainly for the buyer’s protection and is used when obtaining title insurance. These cost around $300 depending on the size of your property.
This is especially important if you are buying an older house that isn’t in top condition. Expect to have to repair or replace some appliances or improve cosmetic features of the house upon purchase. You should always take into account how much maintenance the house will require before you offer to buy it. Some houses also require more upkeep for instance if there is a pool or large backyard.
Most people know about closing costs before they buy a new home but aren’t prepared for just how much they will be and what all is included. This expense consists of the cost of multiple steps of the buying process. Application fee, appraisal, escrow fee, courier fee, credit report, title and many more are included in the closing costs. Your lender will give you a detailed list of all closing costs and the total will usually come out to about 2% to 5% of the purchase price. Read more about where closing costs come from here.
One of the most widely forgotten costs of buying a new home are those associated with the actual moving process. Packing up all of your possessions and furniture and transporting them safely into your new home takes a lot of work! You will likely need the help of a moving company and some strong people which can end up costing a big sum of money. According to the American Moving and Storage Association, it costs about $2,300 when moving within the state and about $4,300 for an out of state move.
When calculating your monthly mortgage payments, people often forget to include interest, taxes and insurance costs. These vary depending on where you live and the value of your home but they usually come out to about $1,000 to $3,000 each year. Homeowner’s insurance also varies but is usually about $1,000. Be sure to take these into account when calculating your monthly mortgage.
Another cost that can catch first time homebuyers off guard is that of utility bills. To go from a rental property to a house comes with a significant increase in what you pay for gas, electricity and water. Be prepared and conscious of how much energy you are using in your new home!
If you have more questions about the costs of buying a home or to find out how you can save money, contact a Door agent today!
(Image via Tax Credits, flickr)