Buying a home is exciting — but it can also be expensive. And, we’re not just talking about the actual cost of the home. Some home buyers get so wrapped up in their home budget that they forget to factor in other things like closing costs, earnest money and more.
Find out what hidden costs you can expect to pay for when buying a home that a lot of people either don’t know about or let slip their minds.
1) Closing Costs
At the end of your transaction, there are a wide range of fees paid. These can include:
- Cost of inspection
- Lawyer fees
- Recording costs
- Appraisal fees
- Document fees
- Surveyance fee
- Title cost
- Sales brokerage commission
- Mortgage applications
- Home warranty
When searching for your home, ask your real estate agent to go over the potential costs with you. These can all vary based on the home size you’re looking at, your market, the amount of your loan, etc. In 2019, the average home closing costs were about $5,700.
2) Earnest Money
Similar to a security deposit, earnest money is put down up front, before filing any paperwork. Especially in a seller’s market, it proves your level of commitment to buying the home. Once the transaction goes through, you’ll get that money back.
If you back out, though, you risk not getting that money back, so make sure you read your contract carefully and that you are positive you won’t have any setbacks. This earnest money can range from a couple hundred to a couple thousand dollars.
3) Paying for Escrow
Paying escrow up front helps cover expenses like property taxes and insurance. Some lenders will ask that money stays in the account, which shows how important escrow can be. Escrow fees can cost $1.00 – $2.25 per $1,000 in house price, plus an additional $250.
4) Moving Costs
While it may seem like a simple thing, when you get caught up in the closing with paperwork and other costs, a lot of home-buyers forget about the moving costs. With vans, boxes, supplies, time off and company costs if you hire a moving company, you can be looking at a minimum of $1,000. If you’re moving to another state or across the country, you could be looking at a couple thousand dollars.
5) Home Maintenance and Repairs
When you’re buying an older home, having to make repairs or update various appliances is almost inevitable. The decision as to how much you’ll spend will come down to what you deem is necessary to have fixed when you first move in and what can wait.
If you want to start fixing certain things ASAP, you won’t have much time to spare after you close a deal. That’s why it’s important to include your expectations into your budget for buying a home, especially for out-of-pocket expenses.
If your repair or maintenance can wait, then you can always build up the emergency funds in preparation for that expense.
Be prepared for the unexpected by hiring a real estate agent from HomeSmart! We have trained and knowledgeable agents who can talk with you about what you should expect from closing costs and other unexpected expenses that might come up in your transaction. We want to make sure you have the best buying experience possible. After all, this is probably one of the biggest — if not the biggest — purchase of your life. Contact us today to find your agent!