Getting ready to buy your first home? If you’re like most, you have your eyes on coming up with your deposit and ensuring you get an affordable monthly mortgage payment.
The hidden costs of buying a home often hit you in the face at your most vulnerable – when you found the house you want and you are ready to buy.
Your mortgage is only the beginning of the costs to consider when buying a home. Here are five hidden costs that surprise new homeowners every time.
1. Closing Costs
As you prepare to apply for a mortgage, you think about your down payment and your monthly payment. One number (or a long list of numbers) that people don’t about is the cost of closing your transaction.
Before your transaction wraps up, you need to pay lender fees, attorney fees, recording fees, title insurance, mortgage taxes, real estate tax reimbursements, and more.
Depending on your county and state, you could spend two to five percent of your total home cost on those fees.
2. Homeowners Insurance
Anyone getting a mortgage will need homeowners insurance. Your lender mandates it to protect its investment.
But even if you pay in cash or you put enough down that your lender doesn’t require it, homeowners insurance is a good thing to have.
The insurance protects you from fire, natural disaster, and other disasters that impact the livability of your home. Though, it doesn’t protect you from all issues: you can read more about ways you aren’t protected. The average premium is $1,132, but your own premium depends on where you live, the value of your home, and whether you qualify for discounts.
3. Property Taxes
If you don’t have a mortgage, you can scrape by without homeowners insurance (though, you shouldn’t try).
Property taxes, however, will always apply. Your liability depends on local ordinances, and it changes over time.
If you look for a home in an area that lies on the edge of affordability, check out the property tax rate and history before signing the dotted line.
4. Increasing Utility Bills
Many new homeowners come from an apartment or even a house-share setting. As a result, you may have an affordable utility rate, split it with others, or even see it included in your rent.
Moving into a space larger than what you currently occupy means you could see an increase in your monthly utility expenses. It costs more to heat/cool a larger dwelling.
One good idea is to ask the previous homeowner to show you copies of their previous utility bills to give you an accurate picture of the cost of running your heating and cooling system.
5. Time Expenses
The freedom that comes with your new home also comes with a second cost: your time.
While the financial considerations are the most pressing, you will find that your next biggest cost in time. Remodeling, maintenance, repairs, and yard work all become your responsibility and failing to uphold your commitment to your house can cost you more in both time and money in the long run.
Do You Know the Hidden Costs of Buying a Home?
The hidden costs of buying a home become a significant financial liability, particularly if you get caught unprepared.
Be sure to work with professionals who prepare you for the potential costs of homeownership as you look for a home. They will prevent these costs from becoming unpleasant surprises.
Have you encountered any hidden homeownership costs?
Keep reading our blog for more tips.