5 HIDDEN HOME BUYING COSTS

THAT NOBODY TELLS YOU ABOUT…

You’ve finally done it! Every bargain store in town knows you by name and you haven’t had avocado toast in months but it’s worth it because you’ve saved enough to get pre-approved for your first dream home. You’ve put in the offer, you’re on your way, you’re about to celebrate with a Starbucks caramel latte with extra whip… and then the bank calls… 😩

It’s a familiar scenario; there are few things as exhilarating as the feeling of buying your first home, but being hit by a seemingly endless barrage of unexpected and costly expenses can very quickly kill your buzz.

So save your sanity (and your bank account!) by making sure you’re familiar with all those sneaky additional costs associated with home ownership and the buying process. To help, we’ve compiled a list of the mosts common hidden expenses that no one talks about when you’re buying your first home.

1. APPRAISAL & INSPECTION

Although commonly confused, a home appraisal & a home inspection serve two distinct purposes and both come at a cost so make sure you are factoring these into your budget!

An appraisal is usually required by lenders and will assess a home’s condition to determine its market value, whilst an inspection will dive deeper into any potential issues.

Inspections are not generally required but are highly recommended as identifying issues early on can support your price negotiations and save you a lot of $$ in the long run.

2. LOAN ORIGINATION FEE

In exchange for setting up your loan, your lender will charge a percentage of your loan value, called an origination fee, which will usually be an upfront cost paid upon closing. This is a cost which is often overlooked and can be a real sting in the tail of an already steep bill of closing costs so make sure you’re prepared. No one wants costly surprises dampening their celebrations on the big day!

Hint: If your lender does not charge an origination fee, check the interest rates – you’ll probably find they are higher than average and this will usually cost more overall.

3. INSURANCE PAYMENTS

We get it… it’s a drag. Homeowner’s insurance may feel like an unnecessary added expense and it is tempting to be ~~foolish~~ optimistic and ditch it. But understanding the cost of home repairs can be a steep and unforgiving learning curve; even seemingly small problems can come with a nasty price tag! Take it from us: you’ll be grateful for the coverage when the unexpected occurs so it’s well worth including this cost in your calculations.

Besides, if you have a mortgage lenders will require you to buy homeowner’s insurance as this provides protection to both you and them. And don’t forget that a you’ll also need to pay private mortgage insurance if you didn’t make an initial down payment of 20%.

4. ALL YOUR UTILITIES

We’re all familiar with the basic energy & wifi expenses but what about various water charges? Sewer and/or trash service costs? Local maintenance costs?

Utility costs are highly variable and depend on where and how you live. So when you are moving to a different size or type of property or you are moving into a new neighborhood, you may find yourself dealing with a variety of bills that you haven’t encountered before or which are significantly pricier than you are used to.

Be sure to do your research and run the numbers on all the utilities before you commit to buying a new home to avoid busting your monthly budget.

Watch out for any pesky additional installation fees too!

5. HOMEOWNER ASSOCIATION FEES

There are lots of great perks to buying a home in a planned community but if this is your plan then don’t forget to plan for HOA fees!

These are mandatory fees covering maintenance costs for shared amenities & communal spaces and can be substantial and come with severe non-payment penalties so make sure they fit within your budget.

IN SUMMARY…

We’re not trying to put you off. Buying a home is not just a great financial investment, it’s also fantastic investment in yourelf; providing you with a safe, secure sanctuary to call your own and in which to build and grow your future.

But it’s also a big responsibility and unexpected expenses don’t just drain your wallet, they also create stress and cost you precious time and energy so it is crucial that you do your homework and get a full picture of all the costs involved so you can create a robust budget which works for you and your needs.

Did you find these hints helpful?

Check out our list of the top homebuyer hacks you won’t hear from your realtor!

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