When buying a home, things won’t be so clear regarding the price. It’s not just the down payment you need to consider. There are a few more extra expenses you will have to have in mind. Otherwise, you will find your monthly costs too challenging to cover once you buy a home. So, before you set your eyes on a certain property, make sure you have considered the following costs, too:
1. Homeowners insurance
This is something you need to have, in case of a natural disaster or any other failure or accident. Burglaries, roof leaks, flood in the basement – every issue should be covered by the insurance. The insurance quotes depend on several factors, some of which are: your home’s value, the deductibles, your insurance claim history. Of course, it also takes geography into consideration, as some areas are more prone to earthquakes and floods. Depending on all of these factors, your monthly insurance fee can be between $60 and $170.
2. Property taxes
Property taxes differ greatly, depending on the area where you want to live. They can cost you a lot in some cases. In some regions and counties, you will have to pay 1% of the value of the property, and the taxes specified by the city, while in others you’ll be expected to pay 2% as an average annual tax rate.
3. HOA fees
In case you want to buy an apartment in a co-op or an estate in a gated community, you will probably have to join the HOA
(homeowners’ association). This automatically means you’ll have to pay monthly fees to the HOA for regular maintenance of the building and common areas like the garage, elevators and landscaping. Any problems and failures inside the building will also be covered by your fees.
4. Closing costs
This type of costs includes the payment to your broker, legal fees and application processing fees, as well as appraisal and inspection fees. If you’ve had any pest inspection, it will be included in the closing costs, too. Of course, many of them differ in price, depending on the firm that helps you. So, it’s possible to have affordable conveyancing fees if you find the right company. In general, all of these costs differ from country to country and from state to state, but they will generally amount to 2-5% of the purchase price of the real estate.
5. Moving expenses
This is something many new homeowners don’t take into account. You will probably have to get professional assistance for moving all your stuff. Even if you have friends to help you, the transport will definitely cost you quite a bit. Also, some new homeowners want to fill the space with new furniture, while others want to decorate it as soon as possible. It’s possible you will want to make some upgrades at the very beginning to make it more comfortable or practical. These are all the costs that will occur immediately after the purchase so you have to have them in mind.
6. Mortgage payments
You need to be sure that you will be able to pay your mortgage rate in the months after the purchase. It’s important to know that because some lenders ask for additional cash because they need you to prove you can keep up with the mortgage. Even if they don’t, you should still be sure you have enough left in case of an emergency, like losing your job.
As you can see, buying a new home can get tricky when it comes to the expenses. There are many expenses that don’t cross your mind until you have to pay for them. That’s why you need to identify every single hidden cost there is so that you know how big your budget has to be.