The 6 Hidden Costs That Come with Buying a HomeInformation for
Homebuying can be exciting. However, if you think being able to afford the mortgage and down payment is all you need to move into your dream home, you’re mistaken. While these two will make the greatest chunk of homebuying costs, there’s a long line of additional expenses that will come in your way. Here’s a look at the biggest hidden costs of buying a house.
1. Home Inspection Fee
Once the seller has accepted your offer price for the house, you will need to get a home inspection done before making the purchase. Skipping this step is never a good idea because you might have to pay a lot more if you move into a new house without getting home inspections done beforehand. A licensed home inspector knows the ins and outs of the house. By taking a close look at critical elements such as the foundation and roofing, the inspector can uncover potential issues. Most home inspectors can charge you anywhere from $200 to $400.
2. Property Taxes
It’s easy to forget about the property taxes because they may be lumped into your monthly mortgage payment. Property taxes can vary based on your location. The mechanism of tax payments will depend on your mortgage lender as well.
3. Homeowner’s Insurance
The homeowner’s insurance protects your property against any unforeseen disasters or accidents. It’s also a requirement to get your mortgage loan, so there’s no way you can skip factoring it into your budget.
4. Private Mortgage Insurance
Private mortgage insurance (PMI) is typically a part of your monthly mortgage payment. Homebuyers are usually required to pay the PMI when they get a conventional loan with a down payment of less than 20%. Apart from the amount of your down payment, other factors that can influence your PMI are your assets and credit score. Most private mortgage insurance premiums will cost from 0.5% to 5% of the original amount of mortgage loan every year.
5. Closing Costs
Your next cost consideration should be the closing costs. These are the various fee that lenders charge to the buyer for services that need to be performed to close the deal.
The most common closing costs associated with buying a house include:
- Home Appraisal – For determining the fair market price of the house
- Title Search or Exam Fee – This fee goes to the title searching company that searches property records of the house to make sure there are no legal issues or liens associated with the house.
- Closing Fee – Paid to the title company or attorney who conducts the closing.
- Credit Report Generating Fee – Mortgage lenders will need to see your credit report to determine your eligibility for the loan.
- Title Insurance – This protects you in case someone challenges your ownership of the property.
On average, homebuyers can expect to pay anywhere from 2% to 5% of the purchase price in closing costs.
6. Utilities and Maintenance
Last, but not least, you will need to make room in your budget to start paying for utilities, such as gas, electricity, and water, as soon as you get the ownership of the house. As for maintenance costs, you have to consider expenses like drain cleaning, yard care, HVAC maintenance, and snow removal. You will also have to look around for internet and cable services if you’re moving into a new neighborhood.
To Sum Up
As you can see, if you're considering buying a house, you have to be mindful of these hidden homebuying costs when working out your budget.