Plan for hidden costs when purchasing a home
The joy of homeownership always comes with the fear of hidden costs and unexpected fees. A word of advice, plan for hidden costs. Make sure you get “rainy day funds” in order when purchasing a home because you will need them!
If you have just started out looking for the perfect home, be careful of finding the home too fast. The asking price for the home is just the beginning of the transaction. Be prepared for additional, unexpected, home-buying costs that can catch a home buyer unaware. Quite quickly you can be left feeling underwater on your new home purchase.
Possible Unexpected Fees
When purchasing a home, the spending doesn’t stop with a down payment. Homeowners insurance and Closing costs, like appraisal and lender fees, are typically easy to plan for because they’re lumped into the home-buying process, but most costs beyond those vary!
Keep in mind you will need to hire a home inspector. Yes, that costs money too. Your home inspector will be the one who will look for any sources of bad wiring, weak foundations, wood rot, and other hidden problems that you may not be able to see with your own eye. If the inspector notes issues in his report, these problems may not be covered by home insurance. If a serious issue is uncovered, a decision will have to be made about continuing with the purchase of the home. You can either negotiate the improvements into your purchase agreement or decide against the purchase.
Your comfort, considered
Yes, your comfort is a cost on its own. There are a number of smaller considerations you may not think about until after you move in such as cable and possible higher utility bills. If you were a renter, transitioning into being a home buyer, you could find yourself paying for utilities once covered by a landlord, like water and garbage pickup as well.
Do your research and plan ahead. Budget before house hunting and throughout your search. Try to look at homes in your budget that possibly need improvements, and then research how much those improvements could possibly cost. Nothing is worse than buying a home thinking you can fix the issues for a few hundred dollars and then realizing it will cost thousands.
Keep in mind older houses can be quite beautiful in their architecture but you may incur a much higher home insurance payment, making the house more expensive in the long run. Take the time to research home insurance and property prices in the areas you’re considering before you ever make that first offer. Define clearly the amount you would like to spend on a downpayment and reevaluate your budget to look at how much cash that leaves for improvements and minor costs.
Talk today to one of our loan officers at America’s Moneyline and they will be more than happy to advise you on a perfect down payment amount that is best for your budget.