For many first-time homebuyers, the hidden costs associated with buying a home can be quite a shock. While you may be prepared to repay your mortgage loan and the interest that is associated with it, you may not be prepared to pay the other costs that come with buying a home. Therefore, before making a purchase, it is important to learn as much as possible about the other costs that are associated with purchasing a home so you are not caught off guard by hidden home buying costs at the closing table.
Closing Costs
Whether you are buying a house, a condo or a co-op, you can expect to pay closing costs as part of your purchase. Each lender has different fees that are included in the closing costs, so make sure to ask about these costs and what each of these fee covers. No one likes to be surprised, especially with hidden home buying costs, so know what you are paying for and why.
Attorney’s Fees
Oftentimes, an attorney is included in the process of purchasing a home. While their fees are often fixed, some fees are negotiable. You should find out upfront what the attorney’s fees will be so you can compare the fees of various attorneys. In general, an attorney who tries to charge by the hour should be avoided, as it is relatively simple work.
Appraisal Costs
A real estate appraisal will give you a clear idea of the actual value of the property. While these fees can vary quite a bit from one market to the next, they typically cost anywhere from $400 to $500 to complete. Be sure to find a reputable appraiser in order to get the most reliable report.
Inspection Fees
Before you finalize your contract to purchase the home, you will need to have the home inspected. During this process, the inspector will thoroughly check the foundation, the structure, the electrical and plumbing systems, and all other aspects of the home to determine their condition. Brian Kinkade of coloradoluxurycondos.com/ points out, “If the inspection is done poorly, you could find yourself unexpectedly paying thousands of dollars toward repairs.” The inspection itself, however, should only cost anywhere from $300 to $400.
HOA Fees
If you choose to purchase a condo or to live in certain communities, you will need to pay homeowner association fees as part of your residency. In some cases, you may also be charged an additional maintenance charge, so be sure to learn about these fees and to budget accordingly.
Utility Charges
As a homeowner, you will find yourself responsible for paying all of your utility charges. These typically include costs such as water, gas, electricity, cable or satellite, phone and trash collection. According to real estate agent Ted Whitt , “these bills can add up to hundreds of dollars every month“, so be sure to research the municipality to get a clear idea of how much you can expect to pay toward these expenses each month.
As always, consult with your real estate agent and a real estate attorney to ensure you understand any hidden home buying costs that could crop up in your transaction.
