If you are considering buying a house, first and foremost, congratulations! Home ownership is an important step toward building personal wealth, and it offers numerous benefits for you and your family. It is important to note, however, that there are many hidden costs that often come with making such a sizable purchase, and the property’s list price is only the beginning. The best way to avoid sticker shock and make sure you are financially prepared for home ownership is to identify these expenditures up front and determine if they will fit into the budget you have set aside. You may be expected to pay for the following, but keep in mind these expenses fluctuate based on factors such as how much you put down, how high your credit is and so on.
Mortgage insurance
If you get a home loan through the Federal Housing Authority, you are going to need mortgage insurance. Mortgage insurance protects your lender if you fail to hold up your end of the bargain. The amount of mortgage insurance you must pay varies based on the amount of your loan and any fees associated with it.
Home inspection fees
If you need private mortgage insurance, you may also be required to have a home inspection performed. Home inspection costs fluctuate based on where you live, the size of your home and other factors, but you can typically assume a home inspection will cost you several hundred dollars, at least.
Home appraisal fees
When you purchase a home, you and everyone involved needs to know its current market value. Generally, this involves having an appraiser come out and determine the value, and the appraisal fee often falls somewhere between $300 and $400.
Property taxes
You may be aware of what your property taxes are going to cost you, but you may not know that you might be expected to come up with this money in advance at your closing. It is not unusual to have to pay months of property taxes up front, so you will want to be prepared if this ends up being a requirement.
HOA Fees
Many modern homes require homeowner’s association fees, or regular payments to ensure that community common areas are properly maintained. These fees may go toward snow-plowing, pool maintenance, security or any number of other areas, and they may require monthly, quarterly or annual payments. HOA fees vary broadly based on the type of community in which your home is located.
These are just a few of the fees associated with purchasing a home that many people do not anticipate. For more about what to expect when purchasing a home , you may want to speak with an attorney.