Unexpected Costs Of Buying A Home
Most first time home buyers begin by calculating how much they can afford for a down payment and what they can afford as a monthly payment. Then they start looking at houses based on those calculations. There are however additional fees and costs that you need to consider before putting in offers on your dream home. Below is a list of common fees that some are not aware are part of the home buying process.
1. Earnest Money
This will vary depending on the price point of the home. Earnest money is usually deposited within the first few days of going under contract and goes towards your closing costs. In today's market, you can increase your chance of getting your offer accepted with a larger earnest money deposit. Standard earnest money deposits start around $1,000.
This cost can vary depending on the size of the home, if you are adding on extra inspections like pest, mold or radon, or just by the companies themselves. Typcally this can run $400-$500. You can shop around for prices but make sure you are choosing a company that you can trust will be as thorough as possible.
3. Appraisal Fee
This will be determined by your lender so make sure when shopping around for rates you are also asking what this cost will be. You will pay this after you make loan application and before they order the appraisal. Typically this runs around $500.
4. Closing Costs
Typically closing costs are 3-5% of your total loan amount. A lender is required by law to provide you with a loan estimate within three business days after receiving your mortgage application. This document outlines the estimated closing costs and other loan details. Though these figures might fluctuate by closing day, there shouldn’t be any big surprises.
5. Association Fees
Make sure to consider the fees associated with an HOA or condo association before submitting offers. If you can't afford these in your budget make sure to let your realtor know you don't want to see any houses that include this.
Homeowners insurance is required if you have a mortgage. You can shop around for rates and these can sometimes be rolled into your mortgage or paid separately.
7. Down Payment
This amount will depend on the type of loan you have, so it's important to talk with a lender about your options and how this will affect your monthly payments.
8. Property Taxes
This varies by county and by the property value. There are many online tools that can give you an estimate of property taxes based on home value and where it is located. You can also look at the county auditor site for previous years taxes on specific properties.
9. Moving Costs
Whether you are hiring a moving company or just renting a moving truck this expense can add up! Consider travel fees, size of your move, packing service, packing supplies, liability and valuation of coverage.
10. Maintenance & Repairs Costs
Not only will you want to budget for any immediate repairs you might have, but also for any future repairs or maintenance items. Making sure your home's mechanics and appliances are maintained will extend the life expectancy and keep everything running smoothly.
11. Appliances & Furniture
Oftentimes moving to a new home means you need to budget for missing appliances or furniture to fit your new space. Not only do you need more furniture when buying a bigger home, but if you are downsizing your furniture might be too large for the space.
Sometimes the unknown of extra costs and fees can be overwhelming and scary, but if you put it all down on paper and make a budget of exactly what you can afford and what you want to spend you will have a clear vision of the price point homes you should be looking at and how much you need to save. Always make sure to talk with your lender about all your financing questions and your REALTOR about all the options that are out there.