Buying a home is an exciting and nerve-wracking experience! Now, more than ever, everyone is advocating to buy a home. Interest rates have been the lowest they have ever been, so there is a home buying craze. But, there are some home-buying hidden costs to consider.
Instead of just focusing on the list price of the home and interest rates, there is more to think about. I’ve put together 5 home buying hidden costs that most people don’t consider when purchasing their home.
1. Closing costs
This one is a big one! When you’re buying a home, you are not just going to pay the asking price. A house might be listed for $250,000, but they are a lot of other fees to also consider.
- Inspection costs
- Legal fees
- Recording and deed fees
- Originating fees
- Loan fees
- Surveyance fees
- Title fees
- Sales commission
- Realtor fees
- Mortgage application fees
- Home warranty fees
These are just some hidden costs of buying a home fees that I could remember from the top of my head. These fees can quickly add up. So not only do you have to worry about your down payment, you have to shell out cash to cover these fees.
So make sure you go over the fees with you are a realtor and your lender so you have a good idea of how much you should budget.
2. Home inspection
Once you have found your dream home and have an offer accepted, it’s always a good idea to make sure that you’re not buying a house that needs a brand new roof, foundation repair, and have Plumbing issues. Some things can only be Discover it is a proper home inspection is done beforehand.
If you uncover hidden structural, mechanical, or roofing issues, you can always negotiate repairs with the seller, or just back out of the deal completely. Getting one of these Home Inspections is not free either.
On average, home inspections can cost anywhere between $200 and $800 depending on your location, size of the home, and all the things you wanted to be inspected. Home inspections are not mandatory, but it’s always recommended to make sure that you’re not buying something that will put you in financial ruin.
3. Appraisal fees
Before A lender lets you borrow the money to buy the home, they want to make sure that the home you are buying is worth as much as you want to pay for it. The only way they can figure this out is by conducting an appraisal.
An Appraisal is basically when an independent certified appraiser assesses the value of the property by comparing other sold homes in the area. They look at things that make the home valuable such as features, upgrades, a deck, age of the roof, etc.
Appraisal fees also vary by state and by the size of the home. You can expect to pay anywhere between $250 and $800 for an appraisal.
4. Homeowner’s insurance
Before the lender even let’s you close on the loan, you will need to have a homeowner’s insurance in place with a home. Homeowners insurance does not come cheap either.
Typically, the lender will require that you find insurance that will cover the cost of rebuilding the home. On average, a typical homeowner’s insurance cost about $1,244 a year, assuming that you have $200,000 dwelling coverage with a $1,000 deductible and $300,000 in liability coverage. That equates to roughly $100 a month.
Now, this lets you and that you don’t live in an area that requires flood insurance such as Florida, where the average homeowners insurance will go all the way up to $3,591 a year. This cost will be added to your monthly mortgage, on top of your regular mortgage payment.
5. Maintenance and repairs
When anyone buys a home, their hope is that they can move in, have no problems, and live there forever without having to make any repairs or maintenance. Unfortunately, that’s usually a fairy tale.
Home Maintenance costs can really catch people off guard, and this is one of the biggest hidden home-buying costs most don’t consider. If it is your first time owning a home, the day your air conditioning goes out, you’ll realize just how expensive those things cost to replace. Imagine somewhere between $5,000 in $10,000 to replace the entire furnace. Not cheap at all!
Once you have bought a home, you would definitely need to start saving up what the inevitable repair or maintenance that will need to be done on the home.
Depending on the age of the home, some houses might need maintenance and Care done more frequently than others. Just something to keep in mind.
Now that you are more aware of some of the potential hidden costs of buying a home, you are now a more educated and mindful fire.
Buying a home is more than just coming up with the down payment. It also includes paying for taxes, insurance, closing costs, and saving up for repairs and maintenance. This is of course outside of having an emergency fund. This is in the case something happens to your income and you will need to maintain your mortgage payments to avoid foreclosure.
You don’t wants to be in your new shiny home and have an unexpected expense that you cannot afford, only to spiral out of control and land in debt and the inability to maintain the home.
Of course, these are all worst-case scenarios, but it’s always better to be prepared than to be surprised. As long as you consider the expenses listed above you’ll be better off in the long run!
Now go out there and get your dream home 🙂
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