Attention First Time Home Buyers: Have You Factored in These Additional Home Buying Costs?
Many home buyers believe that having saved enough for a down payment is all that they need for buying a new home. The notion, however, is far from truth as there are several additional costs associated with home buying, other than down payment. While some loans such as VA loans for veterans or USDA home loans may allow some closing costs to be rolled into the original loan, a homebuyer will likely still have other out of pocket expenses. Having said that, in this post we list five additional home buying costs that homebuyers must factor in at the time of buying a new home.
1. Appraisal Fee
Before a lender lends money to you, they would require an appraiser to determine the current market value of the property. In most areas of Texas, be prepared to spend around $300 to $600 for an appraisal, depending on the area and size of the home. This fee is one of the few fees collected up front, but goes directly to the appraiser, not the lender.
2. Home Inspection Fee
Do not confuse a home inspection with a home appraisal. While a home appraisal helps find the actual value of a property, the purpose of home inspection is to find out if there are any potential problems with the property, for example - structural problems, roofing issues, drainage problems and more. The home inspection cost typically varies from $300 to $500. Though this cost is optional, it is absolutely invaluable and a prudent home buyer should not forego this chance to be sure they are purchasing a home in good condition.
3. Homeowner’s Insurance
When buying a property, it’s a must to buy homeowners insurance in some states in the US. Buying an insurance is important because it helps cover the costs associated with damages to your property. It also provides liability coverage in case of any accidents or injuries caused due to a homeowner or their family member’s negligence. For example, some policies even cover the damages caused by household pets. Important Note: It is very common to include the cost of homeowner’s insurance as part of your monthly mortgage payment, but the premium may be paid out of pocket if you wish.
4. Moving Expenses
An often overlooked cost of purchasing a new home is moving expenses. Whether you are renting a truck and paying your friends in pizza and drinks, or hiring a professional moving company to pack and/or move your belongings, this cost should not be overlooked. In addition to movers, there are also setup and connections fees for various service providers such as electric, gas, tv, internet, water, etc.
5. Repair and Renovation Cost
If you buy a home that was already occupied previously, then there are chances that you may need to spend some money on the repairs and maintenance. In addition to repair costs, renovation costs also form a significant part of the additional costs borne by home buyers. In fact one of the reasons people buy their own property is, that unlike a rented house where there are a lot of restrictions in terms of the modifications one can do, one can modify their own house according to their whims and fancies.