September 25th, 2017 10:58 AM by Jackie A. Graves, President
not cheap to buy a home these days, and we're not just talking about the price
of the home itself.
Other out-of-pocket costs that
crop up during the purchasing process, or even when you're moving in, can put
an unexpected strain on your already-hurting bank account.
For starters, you'll need to
budget between 2% and 5% of the home's purchase price for closing costs,
including appraiser, lender, and title fees. New regulations passed last year
mean lenders have to be more transparent about these fees, and (as long as you
read your closing documents) you should have a relatively good idea of what
they'll be when your lender makes you an offer.
those closing costs only make up a portion of the added expenses you'll face.
Nearly half of homebuyers
incurred more than $2,000 in unexpected charges during the homebuying process,
according to a recent survey by TD Bank, and 10% spent at least $5,000 more
than they expected.
people just look at the sticker price of the house and the mortgage
payment," says Svenja Gudell, chief economist at the housing site Zillow.
"But there are a lot of additional costs that can shock first-time
Once you've made an offer on a
property, you'll usually need to pay an inspector a few hundred bucks to give
the home a once-over. If he finds any potential problems -- structural issues
or asbestos, for example -- you may have to pay another specialist to come in
and offer a professional assessment.
can be tempting to skip the inspection to save cash (or to make a more
attractive offer to a seller), it's worth the outlay to get peace of mind that
the home is in good condition -- or negotiating ammo to make sure the price
reflects the necessary repairs. "It's money well spent," says Cindy
Hamann, chair of the Houston Association of Realtors.
2. Bringing cash to the table
Homebuyers are also often
surprised with the extra cash -- beyond closing costs -- that they need to
spend at the closing table. Many lenders require you to pay a year's taxes and
mortgage upfront. If the seller prepaid any taxes or homeowners association dues,
you'll have to pay her the prorated amount for the rest of the year or quarter.
"Once you're done with all
the fees and the deposits for reserves, you may end up bringing many more
thousands of dollars than you thought to the closing," says Keith Gumbinger,
vice president of HSH.com.
Once you've officially closed,
you'll need to pay for the move itself. That cost will vary considerably
depending on where you live, how far you're moving, and how much stuff you'll
need to haul. In general, though, expect to pay at least a few thousand dollars
for professional movers.
While you may be able to put off
renovations or furniture purchases, there are some costs that new homeowners
face right away. You'll likely want to hire a locksmith to change the locks,
for example, and there could be deposits or setup fees for getting your
As a new homeowner, you'll also
now be on the hook for both routine, and unplanned maintenance costs on the
home. Experienced realtors say you should expect something to break or need
replacing within your first year.
Set up an emergency savings
account with at least six months of expenses that you can tap if your roof
springs a leak or the heater suddenly stops working. That way you won't have to
turn to credit cards to cover the unexpected, and you can spend some time
enjoying your experience as a new homeowner, rather than worrying about how
you're going to pay for it.
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