The decision to buy a house is a big one and one that can end up costing you quite a bit of money. After the actual mortgage payment that goes into buying a house there are actually a lot of other expenses that you need to be aware of. We are going to explore these extra expenses, the hidden costs if you will, and help you get ready to pay for the dream home you have always wanted. It is important to know that this is not an exhaustive list of expenses and costs; the actual amount you will be paying and the number of costs is dependent on your local laws, the lender you work with and chosen real estate agent.
The Down Payment
Down payments are very important when it comes to buying a house and are a cost that everyone needs to be aware of. You see, you can’t just waltz into a bank and have them hand you over several hundred thousand dollars to buy a home, you need to put up your own money as collateral. This makes it so the bank won’t lose as much money if you default on the mortgage.
Mortgages can be of almost any amount depending on what your lender requires so you will need to start working with them as soon as possible so you can know what your savings goal can be. However, in most cases, it is assumed that a down payment will be about 10% of the cost of the house unless otherwise specified. That means, if you are trying to buy a home for $100,000 the 10% down payment would be $10,000.
The Home Inspector
Home inspections are very important when it comes to buying a home. You see, a home inspector comes into a home and checks it out to see if everything is in working order, or at least the vital parts anyway. In essence, they are giving the house a check-up like a doctor would give a patient a check-up. They go through the house and make sure that the foundation isn’t cracked or that the roof isn’t leaking and so on and so forth. Their assessment can make or break a real estate deal because the inspector is the one that will find mold or any other detrimental problems.
Usually, an inspection is required by the lender to make sure they aren’t buying a house that is just going to fall apart or lose them money in any way. However, if it is not required by the lender or you are buying it all in cash without a loan, it is smart to have an inspector come through to make sure everything is looking good.
The Home Appraiser
Now, there is the home appraiser that needs to be paid. A home appraiser, like the inspector, is a person that comes through and assesses the house. However, the appraiser is not looking at the strength or condition of the house, he or she will be looking at the value of the house. You see, home appraisers, like the appraisers on Antiques Roadshow, tell you how much something is worth - in this case, it is a house.
The reason you want to have an appraiser go through a home you are thinking about buying is because they can tell you if the seller’s asking price is too high. It would be a shame to buy a home for $200,000 and find out later that it is only worth $150,000. You can use this appraisal to renegotiate if you do find out that they are over-charging you on it that way you don’t end up wasting money.
Closing costs are kind of the traditional hidden costs when it comes to buying a home because no one thinks about them until the very end. However, if you go into this whole thing with it in mind it won’t be that big of an issue.
Closing costs are usually things like paying the escrow service, paying your real estate agents, paying the taxes involved in the deal and so on and so forth. Again, the exact expenses involved with closing costs will differ depending on where you live and what agencies you work with. They can get quite hefty in some situations so be sure to check for all the hidden fees and such before you sign any contracts or hire anyone. Most agencies will be organized and upfront about the costs and fees though on some occasions, they may not just out rightly tell you so make sure to ask.
Now, we talked a little bit about taxes earlier but this section is actually about the taxes that come after the process is complete. What are these taxes? Property tax. Property tax is something that you have to get used to as a homeowner. Your property taxes will be assessed by a government employee or contractor based on the estimated value of the property.
You have to pay property taxes every year and there are many kinds of payment options available. Be sure that you know all the options open to you, which are dependent on the local laws in your area.
So there you have it, the hidden costs of buying a house. Now, remember what we said at the beginning, this is not an exhaustive list of all the costs associated with buy a house, so it is best to do your research ahead of time so you know what you are getting into. Talk to your real estate agent before your house hunt gets too serious about how much you should expect to pay by the end of everything. Our real estate agents at the Hughes Group are not only licensed but they are experienced and knowledgeable in the world of real estate. They can help you out no matter your question or concern. Call today for more information about working with a Hughes Group real estate agent, we promise you won’t be disappointed.