The moment a person buys their first house is one of the most exciting periods in their lives. Regardless of whether it’s your first or third home, it’s a significant life event with even greater costs. Everyone knows that buying a new home can be costly, but the cost of buying a home includes so much more than simply paying for the house itself. It can be startling, especially to first time buyers, to learn how many different things you’ll have to pay for to purchase your new home. Make sure you don’t get caught out with some of these often-forgotten costs. After speaking to experts, we’ve put together a list of 10 hidden costs of homeownership you may not have expected. This way, you can create a comprehensive budget and find a home truly within your price range.
10 hidden costs of homeownership
1. Private mortgage insurance (PMI)
Private mortgage insurance applies to conventional loans for homebuyers who make less than the lender’s preferred 20% down payment. PMI is essential to protect the lender in case the borrower defaults on the loan.
2. Home inspection fees
A home inspection is strongly advised whether the house is an old fixer-upper or recently built. Not only will an inspection boost your confidence in the condition of the property, it can also save you stress and hundreds of dollars in repair costs.
3. Closing costs and earnest money
Down payments and closing costs are entirely separate. A down payment is an initial up-front payment made by a buyer. Closing costs consist of all fees associated with closing on a home. Closing costs include title insurance, appraisal fees, broker fees, and interest. This cost can range between 3%-6% of the purchase price. Earnest money is a deposit made by the buyer to prove intent and ability to purchase a house. Typically these funds go towards the closing costs or down payment and can range from 1% – 3% of the home value.
4. Homeowner’s insurance
This is a type of hazard insurance covering any losses to your property or liability coverage from accidents that occur on your property. The cost of homeowner’s insurance will vary substantially depending on factors such as home location, so make sure to shop for quotes before closing to avoid surprises.
5. Property taxes
You will have to pay property taxes in addition to your regular mortgage payment. Some lenders will include this in your monthly mortgage payment, but it’s important to factor this into your budgeting. Property taxes might vary greatly depending on the location of the home.
Utility costs vary depending on the size of the residence and how much of each is consumed. Water, electricity, and gas are among the main necessities you’ll have to pay for. Ask your real estate agent for an estimate on the home’s monthly utility costs to make sure it’s within your budget.
7. Maintenance and home repairs
Some of the biggest costs you will incur are going to be the unexpected events after you acquire the home. The older the home, the higher the chances of a future home repair. Make sure you know how much you’ll have to spend on repairs when you move in.
8. Legal fees
When you buy a new home you will need to hire a conveyancing solicitor. A solicitor’s services are essential to ensure that the property is legally transferred into your name. Moreover, a solicitor can go over all the paperwork connected to the transaction to ascertain if everything is above board.
9. Moving fees
You have to get your stuff to your new place somehow, right? That comes with a cost. It’s an expense many people forget to budget for. You can hire movers or do it yourself with a rental truck. Moving costs can vary based on how far you’re travelling.
When you move, you may not have all the furnishings you need to fill your new space. One commonly forgotten expense is money spent on decorating your new home.