Watch Out For These Hidden Costs of Buying A Home
July 2, 2021
The benefits to buying a home are simple. First and foremost… money. Buying a home is a great investment and it saves you from paying monthly rent. It also brings a sense of stability to your life where you don’t need to worry about leases and rental agreements. On top of that, if you are like most people, owning a home is an aspiration that you one day hope to achieve.
However, being a homeowner isn’t always peaches and cream. If you don’t know what you are getting into, buying a home can turn into a nightmare. In this blog post, we are going to talk about a crucial detail in the home ownership process that is often overlooked until it’s too late, hidden costs.
7 Unexpected Expenses When Buying a Home
1. Closing costs
The first expense that comes right after you have purchased your dream home are the closing costs. Closing costs include, but are not limited to:
- Inspection costs
- Document fees
- Appraisal fees
- Mortgage application fees
- Title costs
- Home warranty
- Brokerage commission
The list is not exclusive and can vary depending upon your deal with the home seller. Make sure to ask your real estate agent to make a clear list of what will be included and what will be excluded in the closing costs so that you don’t have to face any unpleasant surprises in the end.
With your property comes property taxes. Taxes are decided by the township or city where your home is located and are assessed based on the value of your home. On average, property tax is 1.1% of the assessed value of your home. However, in states like Alabama, it goes down to 0.4%.
A real estate agent can provide you with information on the property taxes associated with the property. You can also visit https://www.usa.gov/ to get official tax information.
3. Moving Costs
The cost of moving is another expense. Although it is a one-time affair, it is an added expense nonetheless, which you need to keep into account when financially planning for buying a home.
These costs can add up to quite a lot, especially if you are moving from a far-off location. Consider the distance when planning the move and setting aside a budget for the costs associated with owning a home.
4. Repairs and Renovations
A thorough house inspection will give you a clear picture on any huge house repairs or renovations that are needed but you can never be 100% certain. The risk of unexpected repairs and maintenance are even bigger if you are buying an old property. You should always set aside money just in case any unexpected expenses pop up when becoming a homeowner. Even if you don’t have to carry out immediate repairs or renovations, it’s good to build an emergency fund to cover any unwanted situation that may arise in the future.
Not really a hidden expense but a regular expense nonetheless. Electricity, water, gas, and sewerage, are some of the utilities that you will be paying for as the homeowner. Not to mention the cable and internet. Don’t forget to take these costs into account when planning your budget and mortgage repayment.
6. Home Maintenance
There are regular maintenance costs associated with every property. From the electrical appliances installed in the home to the heating, ventilating, and air cooling (HVAC) system, you will have to bear the regular wear and tear/service costs of everything. Don’t forget about the plumbing. Keeping into account these maintenance costs is always a good idea.
If you are buying a home with a lawn then you also need to consider the expenses associated with landscaping and lawn care. Whether you plan to do it on your own, or get it done from professionals, the bottom line is that it will be a recurring expense.
Summing It Up
As you can see from the information provided above, there are several other costs associated with buying a home apart from the brokerage fee and actual cost of the home. Many people make the mistake of not accounting for those expenses. As a result of this, home buying turns out to be a bad decision for them. If you don’t want to end up like them, then do keep these additional expenses into account when calculating your home buying costs.
Do keep an eye on these expenses, and you will thoroughly enjoy your journey as a new home owner. Fail to keep them into account, and you may end up regretting ever becoming a homeowner in the first place. The choice is entirely yours. We would also recommend you to check our recent post on important things to consider when buying your first home.
If you are looking to buy a home, and need help from a professional dedicated to getting you the best deal possible, then get in contact with a Negotiator Recognized Partner (NRP). These real estate agents are the top-performing agents in their local market and are adept at negotiating the best deals in a highly competitive market.