Buying a new home is exciting but also expensive because of so many factors, including hidden costs. Beyond insurance and mortgage, there are other hidden costs of buying a home that homeowners need to know before having a budget.
In this article, the most common hidden costs of purchasing a new home are discussed. Keep reading to understand the costs so that you can have a proper budget and not be surprised during the process.
Hidden Costs Related To Purchasing A New Home
Keeping all of these hidden costs in mind will help you to minimize risks during the home purchase process:
Property Taxes
Some lenders may add up the property taxes along with your mortgage, making it almost easy to forget this cost. Property taxes might not be a big deal for some while huge expenses for some of the homeowners as per the state regulations and other factors. It would be a good idea to check the expected amount you will have to pay to move into a new area.
In some cases, you might have to pay a supplemental property tax at the year’s end. It would happen if your county decides that your house was valued under the market price at the sale’s time and there’s a tax difference in its new value.
Earnest Money
Earnest money is what you have to pay upfront even before filing the paperwork to show your seriousness in buying the property. It is like a security deposit you will get back after the transaction gets done. If you back out of the deal, there’s a chance you won’t get this money back.
Closing Costs
Closing costs include various fees that need to get paid at the time of closing. While it is not the most comprehensive list, here are some of the things that will be needed to take care of by the homeowners:
- Fees of the lawyer
- Inspection cost
- Recording costs
- Appraisal fees
- Document fees
- Title cost
- Surveyance fee
- Mortgage applications
- Sales brokerage commission
- Appraisal fees
A home buyer’s warranty is one of the additional things that you can add to stay safe from any unforeseen costs of appliances and home systems. It is one of the most common things that homeowners invest in to stay safe in the future.
Ask your realtor to check all the closing costs so that nothing goes out of your budget.
Paying For The Escrow
The buyers need to pay for their escrow account beforehand to cover expenses like taxes and insurance. Some lenders might need to keep an extra amount of money in the account, making escrow an essential part of your budget.
Homeowner’s Insurance
Like property taxes, homeowners insurance may get included in the monthly mortgage price. While it gets accumulated with other expenses, you should remember that it is a part of the expense. It can even go up because of the coverage requirements.
Interest Rates
As a homeowner, you can’t avoid interest rates. However, having a good credit rating will result in a lower interest rate, thus saving you a lot over time.
Moving Costs
Moving costs are one of the things that you shouldn’t forget about whenever you decide to move into a new home. It can be one of the most expensive things if you move far away. Typically, the farther you move, the more price you will have to pay to the packers and movers company.
Utilities
Remember the utilities you will have to pay for if you want to move into a bigger place. They include:
- Gas
- Shower
- Water
- Electricity
- Cable & internet
If you get these services installed, the cost will go up. Ensure that you research well in time to get a fair estimate.
School Taxes
Depending on where you purchase a home, you might need to pay school taxes to help the local schools. It is one of the major hidden costs of purchasing a new home as many communities charge more taxes for coverage of new schools. Your real estate agent will let you know about the school taxes attached that come along with the purchase of the house.
Homeowners Association Fees
Homes present in a planned community might need to pay the homeowners association fee monthly or annually for coverage of landscaping costs, and maintenance of different amenities. The fees are mainly dependent on your community, but, they can be somewhere around $200 to $400 monthly. You can skip the fees if you purchase a home without any homeowners association.
Final Words
There can be a lot of hidden costs associated with purchasing a new home. So, the experts always recommend you properly research and set up a good budget to avoid surprises. Go ahead and make a wise decision to have a smooth transition while purchasing your new home.