Buying a home is an exciting process that allows you to get a fresh start in life: but it’s more expensive than you’d ever believe. If you’re ready to buy a home and want to be prepared, these are five unexpected expenses every new homeowner should know about. Â
Closing Costs and Earnest Money
The two first surprise costs you might see are closing costs and earnest money. Earnest money is an amount, from $500 to $10,000, that shows you’re serious about buying this house and that taking it off the market is okay because you’re buying it. If you back out of the deal, you lose this money, and the homeowner gets to keep it. This is a high-cost many homeowners don’t know and can’t be folded into your loan.
Closing costs are everything from the cost of the home inspection to the price you have to pay your realtor. This is around 6% of the home’s value and is a big pill to swallow.
Homeowner’s Insurance
Once you buy a home, you want to protect it as much as possible. There’s no law saying you have to have homeowner’s insurance, but most lenders write it into the contract to protect their investment.Â
Homeowners’ insurance can vary depending on where you live, with more flood and danger-prone areas having to pay hundreds more every month. This is a high cost that you’ll need to remember. Â
Lawn Care and Maintenance
Your lawn should be an oasis where you’re ready to kick back and relax: but most first-time homeowners don’t already own a lawnmower, weed-whacker, trimmer, hose, rake, or anything else that’s necessary to keep a yard going. This means that your home could quickly start looking rough unless you put some real money into it. This type of maintenance can cost thousands every year. Â
Homeowners Association Fees
HOAs have been in hot water in recent years as homeowners begin to question how much these associations really help their property value. Although there’s no set amount of value they add, numbers do show that homes in HOA neighborhoods are usually worth more. Unfortunately, this can add anywhere from $50 to $1,000 a month to your bills. This cost covers any maintenance of the neighborhood and the legal action they may have to take against noncomplying homeowners. Â
Home Repairs and Updates
When you drop hundreds of thousands on a home, the last thing you want to think about is putting tens of thousands into a roof replacement. Home repairs are something that’s going to come up soon after you buy your house.
Whether this is a newer home that simply needs more insulation and a couple of minor repairs, or it’s an older home you got for a steal that needs a ton of work: it’s vital that you keep these costs in mind. Although they aren’t in the upfront cost of your home, that’s worse to some degree since you often don’t get to pay it off in chunks.Â
Every Property Can Take a Lot of Money
Whether this is your first home or you’ve owned a couple before it: you may still run across surprise expenses! Keep these costs in mind when you’re planning your budget for buying your home.
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