Unexpected Costs to Consider When Buying a Home

    bankruptcyIf you’re searching for a new home, you’ve most likely played around with a loan payment estimator. Many of these online tools use your down payment, loan amount and interest rate to calculate a total monthly payment.

    But the cost of purchasing and owning a home goes far beyond your principal and interest obligations. Here are a few of the hidden costs you’ll experience when buying a house:

    • Stretching your budget — It happens all the time: You have a price in mind before you shop. But then you find a house that you love for just a few thousand dollars more. And then you find that other offers are over the asking price. So you stretch a few thousand dollars more to enter a competitive bid. The seller accepts, and now you’ve blown past your budget by $10,000 or more.
    • Home inspection — Not only do home inspections cost between $250 and $750, but they can also lead to some pretty expensive problems. If your home inspection identifies asbestos, lead paint, foundation trouble or other issues, you can ask the seller to remedy them. If the seller refuses, your deal may fall apart and you could still end up paying the cost of the inspection.
    • Closing costs — This varies depending on where you live, but closing costs are almost always a significant expense — count on 2 to 4 percent of the total sales price. Closing costs can include agent commissions, application fees, appraisal fees, processing fees, filing fees and others.
    • Unexpected repairs — No matter how diligent you are before purchasing a home, you’ll notice problems once you move in. Electrical wiring may need an upgrade, plumbing may need maintenance, the hot water heater may take too long to deliver to the master shower, etc. A home warranty can help protect you against some unexpected problems. However, just like any warranty, read the fine print — it won’t cover everything.
    • Homeowners associations — Depending on your neighborhood, you may be obligated to pay homeowners association dues. These dues range from a few dollars a month to a few hundred. Condos often include especially expensive dues, because these dues go toward the maintenance of common areas. If you violate association rules, you may also be on the hook for a fine.
    • Moving and nesting — The cost of moving your belongings from one home to another can be staggering, especially if you’re moving to a different state. And there are more costs once you arrive and get fully moved in. Homeowners who have been living in a one- or two-bedroom commonly save for a down payment. But when they move into a new three- or four-bedroom home, they don’t have the furniture to fill it. The same goes for appliances — if your landlord once provided a fridge, washer and dryer, you may now need to buy your own when purchasing a home.
    • Property taxes — Are your taxes escrowed and incorporated into the monthly house payment? If not, you must save a significant amount each month to be able to meet your county obligation at the end of the year. Take a look at the taxes levied on your home the previous year, and make sure you save even more. They say the only certainties in life are death and taxes, and you can be doubly sure that your property taxes will go up annually.

    Count the Full Cost of Purchasing and Owning a Home

    Before you look for a home, you should get a loan preapproval letter. Make sure you carefully consider the total loan amount that a bank is willing to offer you. When you incorporate your monthly personal expenses and the hidden costs of buying a house, does the loan approval amount still look like a good fit?

    To ensure that you’re counting the full cost of purchasing and owning a home, secure a trusted advisor. At CENTURY 21 Core Partners, each of our agents is experienced and knowledgeable. They can help you identify the unexpected costs of buying a house before you make a purchase. To count the full cost and get help with your home search, contact CENTURY 21 Core Partners today.

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    Our agents write often to give you the latest insights on owning a home or property in the York, PA area.