What to Look For When Buying a Home and the Hidden Costs of Buying a Home
Many first time homebuyers are not aware that when buying a home you don’t simply need the down payment required by your lender and then make mortgage payments every month. There are many additional costs that come with home ownership that you don’t hear too much about, but you need to budget for them.
Yes – its true that owning a home ultimately provides wealth and long term financial security. In addition, because of many of the tax benefits of owning a home, you may be better off from a cash flow perspective — as opposed to renting.
That still done’t remove the fact that many other costs are associated with purchasing a home that little is said about. If you have chosen a good real estate agent or broker they have most likely went over most of this with you. Nonetheless, for those of you that are attempting to purchase your home without a real estate agent – you need to know this list.
Additional Costs in Purchasing a Home
• Homeowner’s association fee – this applies especially if you live in a condo.
• Mortgage interest – this is what your lender gets for lending you the money and it can vary depending on the size and terms of your mortgage contract.
• Closing costs – under these are appraisal fees, attorney fees, title insurance, property transfer taxes and inspection fees. You should look at all the fees you are paying carefully to make sure that there are no hidden ones.
- Appraisal Fees
- Home inspection costs
- Maintenance costs – you need to be able to maintain your home after you have bought it.
- Property tax – you will pay a little over $2,000 a year.
- Home insurance – this is in case of the loss of your home.
- Utilities – in the average home these come to about $3,000 a year.
Other factors to take into account
Other than the hidden costs you should look into the following:
• Check on the condition of the roof. Roofs are expensive and if you buy a home that has an old one you will have to replace it at your own cost. When looking for a home to buy specify to your realtor that you are looking for one with a relatively new roof.
• Be more about the structure than the other things. You may be put off, for example, by the color of the walls when in reality they are very sound walls. You can put a different coat of paint and transform the rooms to your liking.
• Older homes tend to have heating and cooling problems so if you choose something old make sure that the air conditioning works properly. The plumbing also matters – check for leaks, water damage or mold.
• The land that the home lies in also matters – if you buy a home that sits in an area prone to flooding, wildfires or other natural disasters you will be taking a huge risk.
• Insulation is very important. If you buy a house that doesn’t have proper insulation you will freeze during the cold months. It will also cost you a lot of money to heat. Find out from the records the last time that insulation was done.
• Check faucets, showers switches, locks and everything else to make sure that they work. These may look like minor details but if you buy the home and find out that they are broken you will have to fix them at your own expense.
• Have a proper home inspection done by a professional. They are more thorough and they are able to point out problems that you may not have noticed.
Lastly, make sure that you are working with a reliable real estate agent – they will make the process of buying a home a lot easier.