Buying a home is one of the most exciting and stressful moments of a person’s life, especially if it’s their first time. Before you become settled in your new forever home, there are a certain number of costs that you need to be aware of.
There are closing costs and other fees that need to be taken into account when buying a home. These may include an appraisal, property record checks, and estate agent fees. Realtor explains “You can expect closing costs to run from 2% to 5% of your home’s value.” These fees should be explained by your mortgage lender.
An inspection is needed to ensure the home being purchased is structurally safe to live in. It can cost up to $500, however, it may save a large sum of money in the long run. The inspection should only last a few hours but will provide peace of mind before moving into a new home.
A home warranty is mainly for older homes that could have out-of-warranty appliances. Cinch Home Services writes “One thing you don’t want to be faced with is the need to repair or replace your home’s major appliances out of your own pocket.” A warranty will cover kitchen appliances, plumbing, and furnace.
HOA and Condo Fees
If you’re moving into a condo or somewhere with community features, then expect to pay HOA and condo fees. There are most likely to be fees for amenities such as a pool, gym, or doormen. Make sure to check the HOA’s budget and cash reserves.
Maintenance, Repairs, and Renovations
The annual maintenance fees usually come to around 1% of what the property was purchased for. For example, Investopedia says, “You’re going to have to pay more than just your monthly mortgage.” There can be costs for repairs, cleaning and landscaping. It’s important to also keep in mind that the property may need renovations or professional cleaning.
A first time buyer could be unaware of these, especially if someone was renting first. Utility bills will need to be paid to cover costs such as electricity, water and sewage. There’s usually a higher cost for larger properties and the first lot of bills can be significantly higher than the ones to follow.
If a new property is purchased on the outskirts of a city, then there may be higher commuting costs or even the need for a new car to be purchased. It’s also important to note that longer commutes will take up more of a person’s free time.
Citizens Bank explains that depending on the age of a driveway, costs may be needed to repair or maintain it. Repairs may include filling in potholes and seal coating asphalt. It’s important to take these costs into consideration as they can become rather hefty. This will depend on what the drive is made out of.
Along with costs needed to maintain the garden, such as additional water or electricity for the mower, there may also be costs for the purchase of lawn equipment. If it’s a larger garden then there may also be fees to cover the cost of a gardener.
This will mainly be for the colder months of the year. There will be costs of running equipment such as leaf blowers or fees for a professional to come and remove the leaves or snow. These fees will vary depending on the size of the driveway or garden area.
Trash and Recycling Services
Moving warns “The service costs to remove your trash depends greatly on where you live as well as the size of your containers.” It’s important to find out whether these services are charged separately or whether they’re included in the property taxes. These costs include private services and landfill charges.
A house also needs to look good from the exterior, especially if it’s located in a nice area. There will be costs for maintaining the house’s street view. These costs can include flowers, the mailbox and the front door. Regular maintenance may include painting and power washing.
This can be an unexpected one, but that doesn’t stop it from being likely to happen. There can be costs for both the prevention and treatment of pest infestations. For example, Forbes says the average amount for pest extermination is $175. It’s also important to carry out regular checks for any insects or rodents.
These taxes will be based on the value of the home and the location. They’re usually collected annually or can also be included in the mortgage repayments. It’s important to note that these taxes can fluctuate depending on the home’s assessed value, so always be prepared for this.
Make sure to always be prepared for the completely unexpected. The majority of mortgage lenders will also require you to take out insurance. Better support this by writing “In the unfortunate event that something happens to your home, say, a fire or storm damage – your lender wants to ensure you have the financial footing to repay your loan.”
Third-party fees include the appraisal, credit report, flood certification, and title insurance. Some fees will be negotiable but others will be set by the lender and these will be final. Third-party fees are necessary to process the mortgage and the property transfer. Make sure to know what these fees entail before signing anything, as they can also be for a credit check.
It’s most likely that at some point down the line, there’s going to be an unexpected repair needed at the property. LowerMyBills explains, “If your central heating system breaks down in wintertime or a pipe burst, you’ll need to hire someone to fix it immediately.” Emergency repairs can include plumbing, roofing, or water damage.
Lender’s title insurance is necessary as it protects the lender against any title issues. The cost of title insurance can vary; however, it can more often than not be negotiable. This kind of insurance is necessary for safeguarding against any future title disputes and claims.
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