Originally written by WK Real Estate, dated July 10, 2023
Purchasing a home is one of the biggest investments most people will make in their lifetime. However, the price of the house is just one of the expenses you need to consider. There are several other expenses that come with buying a home that you should be aware of. Therefore, to help you prepare, we’ll discuss some of the expenses you can expect when purchasing your home.
A down payment is the initial payment you make towards your home. It is usually a percentage of the total price of the house. The amount of down payment you will have to make depends on your lender and the type of mortgage you choose. Typically, down payments range from 3% to 20% of the home’s purchase price. When you go under contract, you will need to provide some of this down payment upfront in the form of Earnest Money. Each home will identify the amount of earnest money that is due usually 3 business days after going under contract.
Closing costs are fees you have to pay when you close the deal on your new home. These costs typically include fees for appraisals, inspections, title insurance, attorney fees, and more. The cost of closing fees can vary from 2% to 5% of the home’s purchase price.
A home inspection is a crucial step in the home buying process. It is a thorough examination of the home’s structure, foundation, electrical system, plumbing, and more. The purpose of a home inspection is to identify any potential problems with the home before you buy it. The cost of a home inspection can vary depending on the size and age of the home. On average, you can expect to pay between $300 and $500 for a home inspection.
An appraisal is an assessment of the home’s value. Lenders require an appraisal to ensure the home is worth the amount you are borrowing. The cost of an appraisal can vary depending on the location of the home and the size of the property. On average, you can expect to pay between $300 – $600 for an appraisal.
Property taxes are an ongoing expense you will have to pay as a homeowner. The amount of property taxes you will have to pay depends on the value of your home and the tax rate in your area. Property taxes can range from a few hundred dollars to several thousand dollars per year.
Homeowners insurance is an essential expense for homeowners. It protects your home and personal property from damages caused by fire, theft, and natural disasters. The cost of homeowners insurance can vary depending on the location of your home, the size of the property, and the level of coverage you choose. On average, homeowners can expect to pay between $700 and $1,500 per year for homeowners insurance.
If you are purchasing a home in a community with a homeowners association (HOA), you will have to pay HOA fees. These fees cover the cost of maintaining the common areas of the community, such as parks, pools, and playgrounds. The cost of HOA fees can vary depending on the community and the amenities offered. On average, you can expect to pay between $200 – $400 per month in HOA fees.
As a homeowner, you will be responsible for maintaining your home. This includes regular upkeep, such as cleaning gutters, replacing air filters, and landscaping. You may also have to pay for unexpected repairs, such as a leaky roof or a broken appliance. The cost of home maintenance can vary depending on the age and condition of your home.
Finally, you will have to consider the cost of moving into your new home. This includes the cost of hiring movers, renting a truck, and buying packing supplies. The cost of moving can vary depending on the distance you are moving, the amount of stuff you have, and the services you require.
In conclusion, purchasing a home involves many expenses beyond the price of the property itself. It’s important to be aware of these expenses and factor them into your budget when buying a home. Some of these expenses, such as down payment and closing costs, are one-time expenses, while others, such as property taxes, homeowners insurance, and home maintenance, are ongoing expenses that you will need to budget for.
By understanding the expenses involved in buying a home, you can better prepare for the financial responsibilities that come with homeownership. While it may seem daunting, owning a home can be a great investment and a source of pride and stability. With proper planning and budgeting, you can enjoy the benefits of homeownership while managing the expenses that come with it.