Buying a house is the most expensive thing most people do in their lifetime. It’s important to budget and to know what to expect, but in that budget, a lot of people miss charges that they ordinarily wouldn’t consider. When caught off guard with these expenses, if someone didn’t make room in the budget for them, they may run the risk of missing a mortgage payment, or losing their home entirely!
Here are some hidden costs you have to expect.
Taxes:
There’s no way you could make a purchase this large without the government wanting a cut of it. Several kinds of fees kick in for homeowners, and you must pay them correctly (and on time!).
Property taxes get calculated based on your location, your property size, and the value of the structure itself.
The average American pays nearly $3,000 a year in property taxes, and although it might not sound like much compared to a $300,000 home- if you didn’t get the chance to budget for it: $3,000 can break the bank.
Other taxes can also come into play, depending on where you live. Some districts will charge a School Tax on top of your property tax, that works the same way.
Research your area, look at tax rates and other fees that come with it, and then budget accordingly.
Closing Costs:
We’ve all heard of them, but not everybody fully understands them. Closing costs are all the charges, aside from the price of the home itself, that goes into your buying.
Taxes get charged to the seller, but as the buyer, you can be responsible for legal fees, title insurance, lender costs, and other smaller price tags that add up.
Do the math, using a home affordability calculator may help, and figure out what’s right for you.
When in negotiations for the home, if there are updates needed, consider asking the selling to cover the closing costs so you won’t ask to drop the price further. Closing costs can be two to five percent of the value of the actual home, which means if you’re buying a $300,000 home, you could be paying $9,000 in closing costs.
Real Estate Agents
Not everyone needs a realtor, but many people find it helps them feel more comfortable with the hefty price tag that comes on a home.
Realtors can help take care of negotiations, can help you find a home- and will also be capable of giving you impartial advice if you’re not sure about a home or area.
For this peace of mind, most buyers pay around six percent of their property value.
That’s double the closing costs- up to six times the property tax. Hiring an agent is a considerable expense, and you should heavily consider if you even need it before going with a realtor.
Their knowledge can be irreplaceable when it comes to first time home buyers- but make sure it’s in your budget, or it could break the bank.
