Most buyers come into the home buying process with a budget already in mind. But if they match their home price to their available budget, they may end up in hot water come closing time. That’s why it’s so important to make sure as buyer, you properly prepare for the hidden costs you’ll encounter on the road to homeownership. Here are a few expenses to be sure you are aware of.
Closing costs — Many of the closing costs are negotiable, but it’s common for buyers to pay most of them, particularly in a seller’s market. Mortgage fees, title insurance, recording fees, and appraisal fees are some of the small numbers that will add up to be the closing costs, which can vary and depends on the purchase price.
Moving costs — Once the closing is over and the home belongs to you, you’ll still have to shoulder the expenses of moving in. These numbers can vary depending on how far you’re moving and much of the moving labor you’re willing to do yourself, but you should know the answer to these questions before buying a home.
Utilities — While you may be able to afford the monthly mortgage payments, it’s important that you also consider the utility costs at your new home. Depending on their previous living situation, you may not think to consider the costs that come with water, electric, trash, and other necessary monthly utilities.
HOA Fees — If the property being considered is under the restrictions of a homeowner’s association, you could be looking at another few hundred a month in fees. Many HOAs provide services that you may find useful and worth the expense, but you may also want to look into what the HOA provides and make sure you feel comfortable signing on for the fees in exchange for whatever the service provides.
Property taxes — These are calculated based on the value of the property, as well as state and city regulations. This means that different properties even in the same city could come with different property taxes.
Insurance — Homeowners with a mortgage are almost always required to get homeowner’s insurance, so this is a non-negotiable expense for most buyers. The cost will depend on location and other factors, but you can expect their annual premium to be around a thousand dollars.
Once you have a complete understanding of the full financial picture of a home purchase, you may find that your budget has shifted. By getting this out of the way early, you will be looking at homes in your correct price range and will ultimately end up in a house that suits your needs and your budget.