Are you buying a home for the first time? If so, you are probably overwhelmed by all the steps you have to take and all of the additional costs you have to properly plan. If this is you, then do not worry as you are certainly not alone.
Buying a home can be an exciting experience, especially if it is your very first time doing so. However, it is important to have a good understanding of what is to be expected financially. Of course, the down payment on the mortgage is likely to be the biggest cost, but there are several more hidden costs to be aware of as well.
The following are three of the most notable hidden costs to be aware of when purchasing a home for the first time.
Closing Costs
There is likely to be a series of closing costs you are required to pay at the time the house is officially purchased. The exact closing costs may look slightly different in each instance, but there are some that you are likely to have to cover regardless of the circumstances, such as the following:
- Home inspection
- Lender fees
- Appraisal cost
- Title fees
- Escrow costs
It can be difficult to know how much to budget for closing costs. A general recommended rule to follow is to prepare for closing costs to run between two to five percent of the price of the home, which means a $300,000 home likely costs between $6,000 to $15,000 in closing costs.
Taxes and Insurance
Taxes and insurance are costs that many forget to calculate the first time they buy a home. While many may calculate the cost of the mortgage, interest rate and length of the contract and determine they can afford the home, it is important not to forget to factor in property taxes and homeowners insurance, among any other taxes and insurance costs that are required.
Property taxes and home insurance together on average around $3,000 per year and can range between $2,000 to $5,000, which can raise the monthly payment by a couple hundred each month.
Be sure to factor in the taxes and insurance costs when determining whether or not you can afford a certain home you may be considering.
Home Repair
If in the past you rented your home, then you probably did not have to worry about home repairs that were not your fault. As a homeowner, however, you are responsible for all maintenance and repair costs that are needed.
Whether you have to repair the roof or fix a leaky faucet, the additional expense falls on your shoulders. It is important to properly budget for the additional home repair costs as things occasionally do go wrong with your home, regardless of how cautious you are to protect it.
Depending on how nice and functional you plan to keep your home, home repair and maintenance costs can add several thousand dollars to your annual homeowner costs.
EXIT Realty Bob Lamb & Associates is Murfreesboro’s most innovative real estate team.
EXIT Realty Bob Lamb & Associates
2630 Memorial Blvd, Murfreesboro, TN 37129