First time homebuyers are often shocked that buying a house isn’t as simple as sticking a SOLD sign in the yard and signing some papers. There are plenty of extra expenses that many first time
A Guide To Homebuying Costs
First time homebuyers are often shocked that buying a house isn’t as simple as sticking a SOLD sign in the yard and signing some papers. There are plenty of extra expenses that many first time homebuyers aren’t aware of or don’t think of when it comes time to purchase their home. Let’s talk about what kind of expenses you’ll be looking at - not to scare you, but so you can prepare for your homebuying journey.
There is a laundry list of fees and costs that add up when closing on your home, ranging from title insurance to mortgage taxes. From state to state, the values of the fees will fluctuate based on how much they charge, but you’re looking at around 2 to 5 percent of your total home’s cost in closing costs.
They say you should be paying around 1 to 2 percent of your home’s total cost in upkeep per year. First time homebuyers may not have the equipment they need to maintain their home, like a snowblower, lawnmower, hoses, and so on. The cost of these will add up, but they’re also things you will have an extended period of time (if treated well).
Most homes come with the big appliances (dishwasher, refrigerator), but you’ll need to buy anything it doesn’t come with if you don’t already have it (like a microwave or a coffee pot). You’ll also need things to fill your new home! Many first time homebuyers are moving out of an apartment or the home they grew up in, so they don’t have a ton of belongings or furniture because they’ve never had the space before. Keep in mind the extra costs of things you’ll need/like to buy to fill your home.
Let’s not forget about your monthly home payment! Your mortgage will typically have your property taxes and homeowners insurance rolled into it by using an escrow account with your mortgage company.
You're required to have homeowners insurance if you have a mortgage. Do some research to find the best policy for you, and consider bundling with your auto or life insurance as prices tend to be lower if you do so.
You own your property, you need to pay for it - twice a year. These taxes will vary each payment, and will likely increase or decrease as time goes on, never remaining the same.
Because most first time homebuyers are coming from smaller living spaces, they aren’t ready for the shock of their first utility payments. Remember that you’re now in a house, so you might need to turn the heat up a little bit more in the winter to keep it warm, or turn the AC down a little more in the summer to keep cool. As a result, you’ll likely be paying more than you’re used to in utilities each month.
Homeowners Association (HOA) Fees
This typically only applies to those who buy condos, but some neighborhoods also have HOA fees. Essentially, you pay these fees and if anything goes wrong outside your home, they take care of it. The grounds are kept up by the Homeowners Association. This usually means you don’t have to cut your grass or shovel snow, either.
These costs may seem overwhelming and scary, but it’s best to be prepared ahead of time, before finding out after you signed your name on the black line. A good realtor will communicate with you the average price of these costs in the neighborhood you’re looking at, so you can get a roundabout estimate. For more information or help on your homebuying journey, please feel free to call me at (734) 516-0371 or email me at email@example.com.
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