For most people buying a home is one of their biggest financial decisions. It is a huge investment that requires detailed thinking and planning. Although every house on the market comes with a specific price tag, that does not reflect what the final cost of the purchase will be. This is because there are many upfront and ongoing expenses that are not included in the listing price. While not “hidden,” these costs are sometimes overlooked initially. Therefore, before you make the long-term commitment of homeownership, it’s better to be aware of all the additional costs that come with buying a house. Here’s a list that can prepare you.
Extra Costs Involved in Buying a House
Bank loans do not cover the entire cost of buying a home. Depending on the type of loan you get and who your lender is, you will be required to pay a certain amount as a down payment. Although this is not exactly an additional cost, this is something you should be prepared for when buying a house.
Home Inspection Fees
Before you decide to buy a house, it’s important to schedule a thorough inspection. This is also one of the requirements to qualify for a loan. A general inspection may cost you a few hundred dollars, and inspection for termites or a sewer inspection may cost you another few hundreds.
It’s easy to forget about this one. But property taxes are part of your home-buying cost. Typically, the property tax is lumped into your mortgage payment. The taxes will vary by the state and county and are subject to change. So this is one of the additional costs you should be prepared to pay.
A professional appraiser evaluates the house you wish to buy and estimates the market value of the property. This is also important for lenders to justify the amount of money they are lending you. An appraisal can cost you anywhere between $300 and $500 depending on the size, type, and location of the property.
You will need a lawyer to complete the purchase of your house. While most lawyers charge between 0.5% and 1% of the selling price as their fees, some will charge a fixed rate.
If you are using a real estate agent to buy the property, you may have to pay a commission to the agent. In most cases, these fees are paid by the seller. But in some situations, the buyer bears the cost. So before you sign the contract, get a clear picture of the commission structure.
A Homeowners Association (HOA) Fee is an amount paid every month by owners of some residential properties to their association. These fees are used to cover the maintenance of common areas of the community that are maintained by the association.
Repairs & Remodeling
Unless you’re buying a brand new house you’ll likely to have repairs and remodeling projects to handle. Whether it’s for fixing a leaky faucet, or repainting and remodeling the exteriors, the costs may catch you off guard. So be prepared to handle these extra expenses.
Owning a house means paying for maintenance on a regular basis. Utility bills, snow blowing, landscaping, and other occasional repairs and replacements are some ongoing expenses you should be ready to cover.
Once you’ve made the decision to buy a house, factor in all these expenses to prepare yourself for the actual price you will pay. Although this long list of additional costs may seem overwhelming, buying a house is still a great investment that will benefit you in the long run.