When Budgeting For Your Home Purchase, Don’t Forget These Costs
You’ve saved up a down payment for your new home, but you still have additional financial obligations between making an offer and making your first mortgage payment. Inspections, closing costs, taxes, insurance… there are a lot of unexpected costs that can pop up when you’re trying to buy a home. To make sure your budget is ready, read on to learn about some of the hidden costs you’ll encounter when buying a house.
1. Home inspections
Once the seller has accepted your offer, the next step is to schedule home inspections. There’s the general home inspection, which usually costs several hundred dollars. Depending on the age and condition of the home, you may also want to schedule termite, radon, lead paint, sewer and foundation inspections.
Inspections can save you from buying a maintenance nightmare, so don’t skip them. For more details about the ins and outs of home inspections, be sure to read 5 Things You Need to Know About Home Inspections.
2. Land survey
Depending on your lender, you may be required to get a professional land survey to confirm the boundary lines of your property. According to nationwide data from Angie’s List, the average price of a land survey is $550.
3. Earnest money
Typically 1% to 3% of the agreed upon purchase price, earnest money shows the buyer that you’re serious about purchasing their home. If one of the contingencies on your offer isn’t met you can get the money back. Most often, this happens when the home inspection reveals serious issues. If you purchase the home, your earnest money will go toward the down payment or closing costs.
4. Closing costs
Speaking of closing costs, there’s a reason so many buyers ask for the seller to cover them during negotiations — they can easily add several thousand dollars to the final price of your new home. Typically, closing costs will run you 2% to 5% of the total loan value, and they can include:
- Lender fees
- Home appraisal
- Title and attorney fees
- Property taxes
- Interest (prorated from the date of closing to the first day of the next month)
To learn more about how much you could spend on closing costs, enter your mortgage details into an online closing costs calculator.
5. Homeowner’s insurance
Some lenders require an active homeowners insurance policy to be in place before closing. If you thought you might be able to get away with purchasing this coverage later on, you may be in for a surprise.
6. Moving costs
Whether you’re hiring movers, doing everything yourself, or paying friends with pizza, there’s bound to be costs associated with moving into a new home. Not to mention, there may be additional furniture you plan to purchase if you are moving to a larger home which brings additional costs.
7. Home warranty
Almost 20% of homeowners cite unexpected maintenance costs as the number one reason they have regrets about their home purchase. For extra peace of mind, some new homeowners purchase a home warranty. These helpful tools protect your wallet from unexpected expenses, provide budget protection and enhance the overall experience of homeownership.
8. Miscellaneous tools and equipment
Owning a home is a lot different than renting. You may need things you never imagined owning before, like a lawn mower and tools for common home repairs. To get the most out of your new home, leave room in the budget for these types of essentials.
2-10 HBW offers the most comprehensive Home Warranty coverage for homeowners. Let us help you protect your home.