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Buying a Home This Year? Plan for These Hidden Costs

December 8, 2020

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Many people dream of having a home of their own. It’s likely to be the biggest purchase they ever make, and before they make their final decision, they’ll devote lots of time and effort to find their dream place. If you’re about to buy your first home or you’re looking for a new location to move into after years of owning a place already, you sure have exciting times ahead. Let’s not get too excited, though. Buying a home is a huge deal, and you need to be well-prepared to do so.

By now, you should know that you’re about to pay a significant amount of money to become a homeowner. However, the costs won’t be limited to the down payment, mortgage, and utilities. If you want to avoid unpleasant surprises, you need to be prepared for the unexpected, and sometimes, new homeowners are overwhelmed by the number of hidden costs piling up upon their purchase. Below, you’ll find a list of 6 hidden costs related to the process of buying a home. If you want to find out more, keep on reading!

Fees and Closing Costs

The process of buying a home is challenging and often requires third-party assistance. You may be surprised how many results searches like “cash home buyers near me” or “buying a house for cash” may turn up. Still, you’ll likely have to pay various fees, for example, to hire a real estate agent, open and close a real estate transaction, or costs related to surveys, title insurance, notary fees, mortgage origination fees, and so on.

Add the fees up, and you may be surprised by the result. Some of them will be relatively low, and others will be more significant. For example, the closing costs may equal to 2-5% of the value of your house. Take that into consideration, especially if you’re planning a bigger purchase.

Property Taxes

Besides your mortgage payments, be prepared to pay property taxes. They can be added to your monthly bill, or you’ll have to pay a bigger sum every couple of months. You may not even be concerned about property taxes if you live in a state with low-interest rates. However, you shouldn’t neglect this issue, so make sure you stay on top of your taxes and know what to expect. Otherwise, you may end up with unpleasant yet necessary expenses you’ll have to cover as soon as possible.

buying a home

Homeowner’s Insurance

Once again, these costs can be added to your monthly mortgage payment, along with property taxes. However, people tend to underestimate the aspects that go into insurance rates.

Insurance premiums are not the same throughout the whole country. They may be higher for people who live in Florida (due to storms) or those who live in California (because of frequent fires). Insurers’ policies are also going to differ. As such, you need to be aware of what influences your monthly insurance premium.

Home Renovations and Maintenance

If you’re buying a home, straight from the developer, you can be sure about its standard and quality. It hasn’t been used before, and you’ll be its first owner. In other cases, however, you need to be prepared to do some repairs and renovations after previous owners move out. First, they may leave it in a less than pristine condition, and repairs will be necessary. Second, you may simply want to make some adjustments according to your liking and remodel your new home to suit your needs. 

Depending on the scale of your project, you may end up paying more than you expected – and you’ll have to proceed with the payments. Let’s not forget about regular maintenance on your new property. Make sure you have it covered! Otherwise, your new dream home won’t be liveable at all.

Furniture and Appliances

So, you’ve found your dream home, and it’s in good condition. You think you’re ready to close the deal and move in! Are you, though? Before you start crossing out dates until your moving day, make sure you have everything you need to start living in your new home right after you unpack your belongings. 

In case you’ve been renting a place, you may not have some furniture or appliances because they were provided by the owners. Or, if you’re moving into a bigger house, you’ll find yourself having more space than before. On the other hand, if you’re downsizing, some pieces of your equipment may no longer fit in. As a result, you may end up paying for renting storage space, or you’ll have to buy new furniture, and it won’t be cheap, either. You need to consider all these scenarios and see which one applies to you.

buying a home

Moving Costs

Finally, you’re ready to move. The fees have been paid, the insurance has been taken care of, and all the legal proceedings have come to an end. You can now start a new chapter in your life! But first, you need to move all your belongings to the new place, and since some people have some hoarding tendencies, it may not be that easy.

Fortunately, it’s a one-time cost. However, you still need to take important factors into consideration. Are you moving within the same time, or is it a cross-country operation? How many things have to be hauled? Are they all easy to remove from your old place, carry out to the moving van, and transport to the new destination? Depending on your answers, you may end up paying a significant amount of money.

The Bottom Line

Whether you’re about to become a homeowner or just want to plan your big day and prepare for it as best as possible, you know that the whole process is quite challenging. You’ve probably done some research and have been aware of some costs. However, you should be ready for additional expenses, and our list is, by no means, exhaustive.

With all that being said, there’s no need to panic. People buy houses all the time, and if they’re prepared well, they end up without nightmare stories about the whole ordeal. Do your research well, plan ahead, and be prepared for everything. Make sure you have some emergency funds at the ready – you may not have to use them, but you’ll have more peace of mind. Good luck!

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