If you are tired of seeing your rent costs rise every year, and you like the idea of homeownership, then relatively low mortgage rates and reasonable prices in the residential real estate market may appeal to you. Being a homeowner has many benefits, but do you know the real cost of buying a house? Many homebuyers can be shocked when they realize how expensive it actually is.
Apart from mortgage payments, a true cost of owning a house involves a multitude of less-than-obvious expenses. Here we set out all the hidden costs of buying a house, so you can be prepared and even save money when moving to your new home. You always need to check the costs of buying a house first-time buyer. There is always the question – What bills will I have to pay when I buy a house?
This is probably the largest additional cost you will have to pay, and it is the tax you must pay for the property you are purchasing. The stamp duty can add thousands of dollars to the cost of buying a property. Yet, stamp duty isn’t a problem for everyone. This amount will change depending on the state where you are purchasing the home, whether it is your first property or not, or if it is an investment property or not.
Stamp duty is calculated on a sliding scale as a percentage of the property purchase price. So, be careful: stamp duty is a hidden cost, and if you want to prevent debt, make sure you calculate it when buying a house. It’s one of those upfront costs of buying a house.
Hiring a real estate agent
If you decide to hire an expert to help you find and buy the right house for you, then you will have to pay that person’s fee. Real estate agents don’t have your best interest in heart, and the more you pay for your home, the bigger their fee will be. If you want to minimize your costs and keep your emergency fund without giving it away for an agent, you may be just fine without an agent.
On the other hand, if you doubt your ability to navigate the real estate market, and you feel a little overwhelmed by the entire process, maybe it would be better to work with an agent. Make sure you find a reputable real estate agent and ask for the references before you hire one.
Moving day costs
If you have little furniture and friends who are willing to help you, you can do the moving yourself for free. But if you have a lot of stuff, you need to remember to budget for your actual move and to hire a professional team to help you, like All Season Movers, who will help you move to your new home stress-free. There are some additional costs you will have to think about on your moving day:
- connecting utilities – it is the most important hidden cost of buying a house, and don’t forget to budget it, otherwise, you will have no gas or electricity in your new home
- cleaning of your current property – you will have to clean your current property before moving to your new residence, so it would be better if you hire a cleaning service to help you
- phone line – moving to a new home means setting up a new phone line and costs can vary depending on your location
Insurance fee is another hidden cost of buying a house
Insurance fees are another commonly overlooked costs of buying a house. Renters insurance is relatively inexpensive, but as a homeowner, you sign up for several new insurance requirements. There are different kinds of insurance, title insurance, homeowner’s insurance, and some additional insurance.
If you live in an area prone to flooding or other natural disasters, you will have to buy additional insurance coverage. It is important to find out whether you need this extra insurance for flooding and natural disasters based on where you live, so contact a local insurance agency. None of these insurances are extremely expensive, but it can add up in the long run and can be added in hidden costs of owning a home.
Home maintenance and repairs
If you have never owned a house before, then home maintenance costs can catch you off guard. You will have to invest in the maintenance and repairs of your home every year. Some years you may spend an insignificant amount of money, but at some point, you will need a new roof.
One day you will discover that your air-conditioner no longer works, so you will want to budget properly and to save the money for all the hidden costs of buying a house.
When you finally buy your desired new house, you will probably want to make some changes. Few new homes need no work done to them, but most new homeowners spend far more than they expect on doing up their new place. If you do it yourself, it can cut costs, but if you hire professionals to help you, be prepared to pay them. How much you will pay them completely depends on how much work you have done.
Monthly mortgage payments on your house are not the only costs you will have to pay as a homeowner. There are many hidden costs that you will have to consider and budget for, and they can add up. If you want to be well-prepared when buying a house, do your research, plan ahead, and save some extra money for maintenance and repair fund.
Mortgage lenders won’t include these costs when they determine a loan amount, but you should. Before you become a homeowner, make sure you are prepared for all the hidden costs of buying a house.