You’ve got a lot to think about when you are buying a home. From calculating how much house you can afford to deciding what you are looking for in a property, it’s important to make sure you aren’t forgetting anything. Consider the following extra costs often incurred when buying a new home so you won’t be left scrounging for cash after your big purchase.
1. Inspection, Surveying & Transaction Expenses
While you are on the search for a home, you (and likely your mortgage insurer) will prefer to have a home inspection before closing. These usually cost several hundred dollars, but can save thousands down the line. Similarly, it can be beneficial to have your property professionally surveyed so everyone is on the same terms for where your land’s boundaries are. These also run a few hundred dollars.
As the house is becoming yours legally, there are also government recording charges, title services and lender’s title insurance, and oftentimes, a couple months’ worth of property taxes. Then, you can start thinking about what renovations should cost and what the house itself needs!
2. Mandatory Community Fees
If you are moving into a townhouse, condo or community, you may need to pay homeowners association dues. HOA fees vary tremendously. Similarly, you may have to pay membership if you live on golf course. It’s a good idea to factor in these payments when determining which property you can afford. These yearly or monthly payments need to be accounted for in your budget. So if you are comparing two homes and one is cheaper but has HOA fees, it may actually cost you more each year.
3. More Bills You May Have to Pay
Just when you thought you remembered everything, there can also be fees for a parking spot, utilities including water, electricity and Internet or phone service. Home security can also add to your monthly bills. Many people consider taking out extra life insurance when buying a new home. This is so survivors could pay off the mortgage.
When all the bills seem to be paid and all the possible fees should have been charged, you must consider maintenance costs. Being a homeowner means you are responsible for the upkeep of your home (roof, floors, painting) and the contents (appliances, furniture, fixtures).
Before you apply for a mortgage, make sure you know where your credit scores stand. Good credit can save you tens of thousands of dollars over the life of a loan, so improving your credit score before you apply can save you a lot of cash. You can see your credit scores for free on Credit.com.
More on Mortgages and Homebuying:
- Why You Should Check Your Credit Before Buying a Home
- How to Find & Choose a Mortgage Lender
- How to Get a Loan Fully Approved