The Hidden Costs of Buying a Home
If you are buying your first home, you will already know that you need to finance the purchase of the home and pay a variety of fees to realtors, attorneys, etc. You might even have to pay certain taxes and fees, depending on the purchase price of the home and whether you have secured finance for the purchase. Then there will be inspection and appraisal fees on top of this. But what about the hidden costs associated with buying a new home? Are you aware of everything you will need to fork out for before you make the decision to buy a house? Below are just some of the costs that many people forget or are unaware about before getting onto the property ladder.
Local Property Taxes
Homeowners in the U.S. are typically obliged to pay local property taxes on properties that they own. The amount to be paid will vary from jurisdiction to jurisdiction and is typically paid annually, although some jurisdictions do allow for payment by installment.
Homeowners are expected to pay both private mortgage insurance and homeowners’ insurance. It is not law to have homeowners’ insurance but many mortgage lenders will require you to have it as a condition of the mortgage. This insurance will provide financial protection against damage, theft, or natural disaster.
Private mortgage insurance (PMI) is required if your down payment is less than 20 percent of the cost of the property. This is to provide financial protection for the lender should you default on the mortgage. However, you can remove this payment as you begin to build up more equity in your property.
Homeowners Association Fees
If you are purchasing a condominium or apartment, your home is likely to be part of a homeowners’ association. In light of this, you will be required to pay monthly fees for maintenance and repairs as well as amenities. They are also typically applicable in planned communities and in neighborhoods with single-family homes.
In some districts, school taxes will apply, so it is worth checking out where you are thinking of buying a property. If you have or are planning to have children, you might be happy to pay a higher price for school taxes. However, if you do not have children, then this could be a deciding factor on where you purchase your new home.
Although most people will be well aware that they will need to furnish their homes, many forget about flooring. According to the folk at Dallas Floors, this particularly applies to those new-build properties that do not already have flooring for the new occupants to make-do with until they can afford to replace the current floors. Depending on whether you want carpets, tiles, or hardwood flooring, the costs can, and do, soon add up.
You may also need to consider blinds, shutters, or curtains for the windows; something that many people forget about but are equally important.
It is also worth remembering that as a homeowner rather than a renter, any maintenance and repair work in your property will be your responsibility. Some new homeowners will put some money aside every month to be used in the event of any repair work that might need carrying out. This could be anything from frozen pipes in the winter and their subsequent leaks to kitchen appliances no longer working properly.
There are many more costs associated with homebuying and homeowning than most people realize. It is a good idea to consider all these costs before you begin the search for your dream home.