One of the most exciting times in someone’s life is the moment they buy their first home. However, whether it is your first home or your third, it is a significant life event with even bigger costs. There is more to buying a home than just the price of the house itself. Some fees are well known, while there are others not many realize until a bill arrives in the mail. If you are buying a home in 2020, plan for these forgotten costs.
Probably one of the most expensive fees outside of the actual home purchase is the inspection cost. You may even need more than one inspection, which only tacks on charges you may not have been prepared for. If you went through a lender, it is likely they will require checks after your offer is accepted. At the very least, you’ll want a general inspection to ensure the home is safe and won’t need thousands in repairs. If it is an older home, you may also want to opt for a sewage inspection to avoid disastrous maintenance in the future.
Homebuyers are aware of closing costs, but they may not realize how much goes into the closing costs. The total can take you by surprise. You can expect to pay between 2%-5% of the home’s purchase price in closing costs. On the average $200,000 home, that’s between $4,000-$10,000! Closing costs include lender fees, appraisal fees, title fees (including notary fees and other fees associated with transferring the deed to you), and interest fees. You may even be required to pay escrow fees—taxes and insurance in an escrow account upfront.
If you’re moving to an area with different utility providers than your old home, you may be required to put a deposit down to turn on the utilities. Even if it is the same company, they can expect a fee to turn them on. These costs can be relatively cheap, but one that should be planned for anyway.
House repairs aren’t so much a hidden cost of buying a home, but rather something that goes along with it. Most homebuyers aren’t prepared for repairs so it’s a good idea to have some savings available should you need to use them. You won’t have a landlord to fix issues now!
Homeowner’s insurance is another cost that you may overlook when buying a home, but it is essential to have it. The average price is around $1,000 per year, but you need to make sure you budget ongoing payments in monthly.
Taxes can be costly, depending on the area. The average is $2,000 a year but broken down into 12 months, which still tacks a good bit on to your mortgage payments.
Don’t blindly go into buying a home in 2020! There is more to purchasing a home than the cost of the house itself. The purchase price of the home will, of course, be the most expensive, but you’ll run into some other expenses that can run thousands. Closing costs add a few thousand to the total cost of buying your home. You’ll also pay for inspections if your lender requires them. Even if your lender doesn’t, it is wise to have an inspection done on the home. You’re looking at a few hundred, up to a thousand more dollars depending on which inspections you get done. Don’t get caught off guard when buying a home.