You’ve been living lean and saving hard for the past few years to put together the money for a down payment to buy a home. Well done! It’s not easy setting aside 5 to 20 percent of the purchase price in order to qualify for a conventional mortgage, so you should feel proud and excited to be buying your first home.
"These hidden costs could mean you need to save a little bit more money or adjust your price range completely."
But before you call a realtor and start looking at houses, you should learn about the hidden costs of buying a home and other expenses you may not have planned for. These home buying costs could mean you need to save a little bit more money or adjust your price range completely. Here are some typical expenses that often surprise first-time home buyers.
Hidden Cost #1: Closing Costs
You know you’ll have to pay them, but what exactly is included in closing costs? In a nutshell, they are the fees lenders and third parties charge when you buy a home, and they can include:
- Attorney fees
- Inspection and appraisal fees
- Surveys to verify property lines
- Title insurance and title searches
- Discount points (which you pay to get a lower mortgage interest rate)
- Recording fees (to record the purchase in local government records)
- and mortgage evaluation fees
Hidden Cost #2: Moving Costs
In the excitement of buying your first home, it’s easy to forget that moving out of your old home and into your new one is an unavoidable home buying cost. If you live in an apartment and are leaving before your lease is up, you’ll likely have to pay a penalty for breaking the rental agreement. Professional movers will charge you a fee, often by the hour.
If you choose to do your own move, you still need to consider the costs of packing materials and rental trucks. Depending on how far you’re moving, you may also need to pay for a night or two in a hotel.
Hidden Cost #3: Homeowners' Association Dues
If you’re moving into a community with a homeowners’ association, it will be the seller’s responsibility to make sure the dues are paid up until the closing date. Dues after that are your responsibility. Many associations collect their dues monthly or quarterly, so it’s likely you’ll need to pay some dues shortly after moving in. It’s important that you factor that amount into your budget when assessing if a home is affordable or not.
Hidden Cost #4: Decorating or Renovations
It is very rare to find a resale home that’s decorated exactly the way the buyers want it. Chances are pretty high that you’ll find something cosmetic you want to change right away, whether it’s changing wall colors, replacing window treatments, or ripping out old carpet.
Even if you’re buying a brand new home, you’ll still have decorating work to do. Starting with a blank decorating slate is exciting, but it can also be costly. New home builders usually don’t include blinds or window treatments of any kind and choose very bland colors for walls.
In addition to the money you’ve set aside for your down payment and closing costs, it’s a good idea to have a few thousand more stashed away to handle the hidden costs of buying a home. With that extra savings, you’ll be able to fully enjoy your new home without having to worry how you’ll pay for it when something unexpected comes up especially for those big ticket items e.g. your roof, heating and ac systems, hot water heater etc
Are you a homeowner? Did you experience any of these hidden costs? Did you avoid them? Share your thoughts in the comments section!
This article is a guest post by Amanda Reed from Kasasa.com.
Amanda is sharing with us the 4 hidden costs to prepare for when buying a house.
This is definitely needed information for any new or future home buyers out there!