Buying a home is a major decision for any would-be homeowner; the purchase, on average, is one of the largest amounts of money a person will spend in their entire life. Unfortunately, many people underestimate just how expensive buying a home can really be. Plenty of hidden costs can come up during the process of purchasing your first home; be sure to budget for these expenses so you’re ready for the full cost of your future home.
Homeowners and Community Associations
Depending on the neighborhood you’re looking to move into, you could have a few more extra fees to consider beyond just your standard mortgage payments. Homeowners and community associations can charge residents for certain services and amenities. This can eventually add up to a higher payment; U.S. homeowners paid approximately $88 billion in assessments toward community associations in 2016. Check to see if your neighborhood will have this requirement before you close on your house.
Inspections and Repairs
While you’re still in the process of searching for your home, be ready to pay for at minimum one thorough house inspection. In many cases, the inspection will be required for the sale of the home. Additionally, don’t just assume that one will be enough; if you’re looking at a few different homes, you may need to pay for multiple inspections. An inspection can also turn up elements of the home that need repair, and there’s a chance you’ll have to cover the costs for those as well.
Finally, pay attention to how closing costs and fees might increase the overall price of your home. Most home listings won’t factor closing costs into the listing price, but these costs can add an average of 2% to 5% of the home’s list price onto the overall cost. Be ready to pay for these additional costs when making your down payment, or you might find yourself coming up a bit short.
Buying a home is a major decision for anyone looking to secure their housing, but budgeting appropriately and being aware of hidden costs and fees can help you be ready to take the leap.