So you’re close to signing the dotted line on your very first house. Congratulations! Before you seal the deal, however, there are some costs you should be aware of so you aren’t blindsided as a brand new homeowner.
Inspections. It’s of the utmost importance to have the home you’re purchasing fully inspected before you buy it. This will save you money on repairs and possibly even prevent putting you and/or your loved ones at risk, should something dangerous that you’re unaware of is occurring within the walls of the home. Many are worried when it comes to home inspections, but these professionals are here to look out for your best interests and to keep you safe. They will check everything from the electrical work to plumbing to the home’s structure. Prices depend upon the size of the home and how thorough the inspection is. Don’t be afraid to ask a potential home inspector how much they will charge to look at your home.
Taxes. More specifically, the property tax. While the amount you pay depends on where you’re living, it’s important to find out what that payment will be per year before you buy the home. Of course, large cities and urban regions will have higher taxes than those living in rural areas.
The cost of utilities. Look into what the estimate of your bills will be as far as electricity and the AC unit. Of course, this is ultimately determined by how often you leave your lights on as well as the size of your home (for heating and air). It’s common to pay around $300 a month for utilities, but it would be a good idea to ask the seller what they typically had to pay each month to get an idea.
Various forms of insurance. If you live near water, it may be in your best interest to purchase flood insurance. If you live in areas where wildfires are common, then, of course, it’s best to purchase fire insurance. Disaster insurance is always a good investment if you live in areas known for flooding, fires, earthquakes, hurricanes or tornados, etc. Look into the different types you will need and the cost of each.
Cleaning services. If you don’t have time to clean (or just simply don’t have the desire to), research local cleaning companies in your area and compare the costs. This will depend upon the size of your home and how often services will be needed.
Repairs or improvements. If there are some repairs needed, these can add up quickly depending on the severity of each issue. Whether you need a new deck, need to build a ramp for a handicapped family member, add handrails to a staircase before the new baby arrives, etc., look into each repair/improvement and “shop” around when it comes to finding the best price for you.
An escrow account. The Federal Housing Administration requires buyers to create escrow accounts, which is where all of the money needed for the transaction is held until the deal is made final between buyer and seller. As soon as the contract has been signed, the mortgage will need to be paid monthly to that escrow account; this lets the lender know you will make payments on time. Additional fees may be required, such as interest, taxes, and insurance.
The Homeowners Association fee. If you’ve chosen to live in a subdivision, development, or suburb, you’re more than likely now a part of a homeowners association and will be required to pay fees annually or monthly. In addition, you’ll need to join as a member and follow their rules.
A home warranty. This differs from home insurance in the sense that while home insurance offers protection from disasters and damages, a home warranty covers the costs of repairs and replacements. This is optional, but overall a good investment. For example, if a pipe bursts in your kitchen, home insurance will cover it. If the pipe bursting is due to a plumbing problem or the kitchen appliance breaks, a home warranty will cover this. This proves beneficial should an appliance break just a few weeks after moving into your new home.
Maintenance work. Whether you will have a spacious backyard that will need landscaping or a large pool that will need cleaning, you can bet you’ll be spending money at some point on maintenance work.
Closing fees. These are associated with the home purchase and are paid at the time of closing when the title of the property is transferred from seller to buyer. This includes application fees, attorney fees, appraisal, inspection, insurance, etc. You will see the total amount you’re paying during this time.