There’s a special thrill that comes with finally finding the perfect house – you love the neighborhood, you’re happy with the commute and pretty much every box on your list is ticked! Even the price is right… but is it? Most buyers try and find the best house for their money – and that usually going to the very top of your budget. However, there are additional hidden costs most first-time buyers are unaware of that can push you beyond your financial limits. Here is a helpful guide to how to tackle these costs so that you can budget properly and make informed choices about buying your new home.
Homeowners Insurance, Home Loans and Closing Costs
Homeowners insurance costs vary depending on the location of the home, the kind of coverage you’re opting for and the company you choose to partner with, but a general rule is that it will cost you $35 per month per $100,000 of coverage. As for closing costs, buyers generally pay around 2-5% of the purchase price. There are also costs associated with a home loan that will depend on your home’s location and the provider of the loan, and usually includes the following:
- Appraisal fee
- Origination fee
- Prepaid interest
- Prepaid insurance
- Tax servicing fee
- Credit report fee
- Processing fee
- Title insurance
- Notary fee
To get an idea of how these fees apply to you and how they add up, it’s a good idea to get a loan estimate form early on in your house hunting process. This not only gives you clear information about the costs involved, it also allows you some time to shop around to different lenders to see who can get you the most affordable offer.
Monthly Expenses
If you’re changing from a renter to a buyer, it’s important to remember that your monthly costs are going to change. In addition to paying for your home loan, you’re also likely to face higher utility bills and bills that are usually covered by a landlord, like garbage pickup and water. The estate agent should be able to get an idea of these expenses from the seller to give you a better idea of your monthly costs.
Plan for Your Moving Costs
Unless you live around the corner, moving into your new home carries a significant cost. Before you buy, try and get a general idea of what it’s likely to cost you – either by getting quotes from moving companies in your area or chatting on local social media groups with people who have recently moved. One way to cut down on your moving costs is to move with as little as possible, but this means buying new items once you arrive and that can add up quickly.
Replacing Appliances
You’ll also need to know exactly what is included or excluded in the sale of the home. While many sellers leave their appliances, others take them with – leaving you with the expense of replacing them. It’s a good idea to speak to your estate agent during the sale process to nail down exactly what is staying and what’s going so that you have an idea of your potential expenses.
Making Your House a Home
Until you start making yourself at home and bringing in all the things you need to live a comfortable life, your house is just a building. Think about whether or not you want cable, Internet connections, to repaint the bedroom, fix up the yard, hang different curtain rails or repair minor issues. They’re smaller expenses but they are essential for most people – and the add up quickly.
Home Inspections
It’s highly recommended that you hire a home inspector when you’re purchasing a home. While it does cost money (one of the reasons many people skip this process), it can save you from massive future expenses. They’ll check the condition of the roof, wiring and electrics, foundation, heating systems and structure of the home – all the areas where critical, expensive issues can go unnoticed. If there are problems, you’ll know whether you can budget to repair the issue or if it’s better to walk away.
Having a clear idea of all the costs involved is key to a stress-free buying process, giving you peace of mind and ensuring that you find a home that suits your needs without putting you under financial pressure. With the right information, you can make an informed decision and find that dream home. Happy house hunting!