First-time buyers often find it difficult to save up enough money for a decent down payment, but it’s a hurdle everyone has to overcome if they are hell-bent on having their own home. However, the down payment isn’t the only thing you have to prepare for. Home buyers also have to allot a portion of their funds to “indirect” home buying costs that aren’t reflected in their home’s total purchase price. Cara Ameer of Coldwell Banker’s video posted on the Realtor.com website discusses the five “hidden” costs home buyers have to prepare for in order to have a stress-free home purchase transaction. Here they are:
1. Closing Costs, Prepaids and other fees- Depending on the price of your new home, expect to spend anywhere between $400 to over $1,000 in processing your mortgage and paying for an appraisal. All home buyers have to go through (and pay for) this process in order to close on a home, so set aside a small portion of your savings for these costs aside from your savings for your down payment.
2. Inspections- A home is one of the most expensive things a person can ever purchase for himself in a lifetime, so it is only natural to check the current state of the home and enter into negotiations should there be any need for repairs, upgrades, etc. Inspections can range from $500 up to a few thousand dollars, depending on the number of inspections that have to be conducted on the home to check its current property condition.
3. (Homeowner’s/Condominium) Association Fees- Many first-time home buyers aren’t aware that with almost any home purchase comes a covenant to become a member of a homeowner’s/condominium association. And when you become a member, you are bound by law to pay for the monthly or annual fees stipulated by your association. Depending on the state, the community, and even the rules of the project owners, association fees can cost anywhere from $40 to $200 monthly.
IMPORTANT TIP: Don’t attempt to skip paying for your HOA fees. RealEstateLawyers lists down two of the worst things that could happen: the association will either file a lien on your property, or you’ll get foreclosed for unpaid assessments. Check the by-laws of your HOA for more information.
4. Maintenance, Repairs, and Decorating (at closing)– The cost of buying your home doesn’t end with letting go of a chunk of your savings to pay for your down payment and beginning to pay for your monthly fees. A home can only be really called YOUR home if you’re comfortable to live in it and it’s customized to meet your needs. Experts advise setting aside money for maintenance, repairs, upgrades, and purchase of new furniture before even starting to find the perfect home. That way, you can easily move in to your new home without charging too many things on your credit card because you realized you needed new furniture and appliances for your home at the last minute.
5. Utilities- Now that you’re settled in on your new home with its fresh paint, wallpaper, carpets, new furniture, and modern appliance upgrades, prepare to pay for another monthly cost of home ownership: utility bills. It is wisest to have your bills auto-paid by your card company, as this will save you from incurring late payment penalties and service disconnections that happen when bills are left unpaid, even unintentionally.
BONUS TIP: While this is something you don’t have to pay for as soon as you move in, think about this large cost that you have to pay for on the first year anniversary of your home ownership (or when the first quarter of the new year comes). Real estate taxes cost several thousand dollars every year. You will be made well aware of this even before you decide to purchase a home (your agent will discuss this with you while you are considering some home options). Instead of paying up your tax dues upfront when it’s due, why not divide up the sum of your payables by 12, and save that portion monthly? That way, you wouldn’t feel financially strained when they are due to be paid, and you don’t have to end up dipping in your emergency funds to pay for your real estate tax dues.
Would you like to watch the original video where this article was based on? Click the link below. Copyright belongs to Realtor.com and to all their rightful owners.
If you decide to work with The Home Experience Group when buying a home, rest assured that our agents will provide you with all the necessary information for a stress-free and seamless home buying experience. Our agents are trained to give our customers the ultimate satisfaction to the point of being pampered. And we partner with top-rate third party providers for any of your closing needs. Get in touch with us today by calling 425-332-6449 or sending an email to our Team Lead, Grace Henrikson, at firstname.lastname@example.org.