Purchasing a home is one of the biggest investments you will make in your entire lifetime. However, it can be difficult to evaluate exactly how much you will need out of pocket to purchase a home. Although much of the home is financed, you likely will still be responsible for additional home purchase costs. Some of the most common homebuyer costs are listed below.
1. Home appraisal fees
Many lenders require a home appraisal prior to closing. The appraisal provides an unbiased professional estimate of the home’s value based on the condition of the property, and is a way for lenders to ensure that homeowners do not overborrow. As the buyer, you will likely pay the appraisal fee, which should cost between $300 and $400 according to Realtor.com.
2. Home repairs
In many cases, a loan may be dependent upon the completion of certain home repairs. Home repairs may also be needed to safely live in the house. Carefully evaluate the inspector’s report and make any required repairs before moving in. Recommended repairs that do not affect safety can be made over time and turned into DIY summer projects.
3. Closing costs
Closing costs are costs that are not financed by the lender. These may include down payment requirements, transactional fees, title insurance, taxes, land surveys, lender appraisal fees, and loan origination fees. Your lender might also roll credit applications and insurance costs into your closing costs. Closing costs are often the most unknown expense of purchasing a home. However, inputting your information into a closing cost estimate calculator can help you to better prepare.
4. Property taxes
Property taxes are the funds that you pay to the city for your property. Depending on your loan, these taxes could be rolled into your monthly mortgage payment and collected into Escrow. However, it is also possible that you will have to budget for these costs on your own. Property taxes are broken up into summer and winter taxes and can be identified by looking at the listed taxes on the original real estate listing. The prices of taxes should be considered along with the listing price.
5. Home insurance
Lenders want to know that their investment is protected. You also want to protect your investment. For this reason, many lenders will require a home insurance policy prior to closing. Home insurance costs can be affected by location, size of the home, year the home was built, and any common weather conditions for the area. The insurance company may also factor in safety features of the house, including an alarm system or fencing.
6. Moving costs
A lot of people underestimate what it costs to move. Depending on the distance of your move; you might have to factor in truck rental charges, moving service fees, and boxes and other moving supplies. For a better estimate of your moving costs, try out this moving calculator.
7. Homeowner association fees
Some homes are located in homeowner associations. Purchasing a home in a home association means you will be responsible for the monthly homeowner association fees. These are fees charged to keep up common areas within the community. You can obtain the exact amount of homeowner’s fees by looking at the listing or by communicating with the HOA.
Purchasing a home is an exciting investment. You finally have a place to call your own. However, it also requires a good amount of planning and understanding of your loan terms and the additional costs of purchasing a house. You will need to factor in all of the added and extra costs to fully prepare yourself for the price of home ownership.
This post was written for Realty Executives by Heather Hardy. Heather is an avid writer who has contributed to numerous blogs and internet news sources. While she writes on a variety of topics, her specialties include real estate, home improvement, and travel. After obtaining two degrees, Heather has found her passion in writing content that improves both readability and knowledge.