If you need to know how to prepare for unexpected costs of buying a home, then we’ve got a plan you can implement today!
Here’s how to get started.
Consider the Hidden Costs of Buying a Home
Houses are expensive. But costs extend beyond the sticker price.
Zillow estimates: Americans shell out approximately $9,000 per year in extra costs when buying a house.
- You’ll Need to Pay for Home Inspections
- Prepare for Unexpected Costs at Closing
It’s often the first major expense.
Have your house inspected before you close on it.
Some lenders require an inspection. Others leave it up to the buyer. However, either way, we highly recommend you schedule at least one, general inspection.
Both general inspections and sewer inspections can run up to $1,000 combined or more.
As you think about how to prepare for unexpected costs of buying a home, we recommend having $2,000 in savings to cover inspection costs.
Plan to spend up to 5% of the purchase price on closing costs.
- Lender Fees: includes administrative costs your lender incurs.
- Appraisal: ensures your house is listed at the correct value.
- Either Title or Attorney Fees: includes deed transfer.
- Escrow Fees: includes both property taxes and insurance you may need to pay upfront.
- Interest: a prorated amount, spans from the date of your closing to the first of the following month.
As a homeowner, you’ll be responsible for both maintenance and repairs.
While it’s difficult to estimate how much you’ll incur each year, it’s best to have an emergency savings account. That is, a special stash you can use any time you need major repair work.
For ongoing maintenance, consider that you’ll need both cleaning supplies and air filters. Also, you may need a lawnmower. Or be prepared to pay a landscape service for yard maintenance.
Many homeowners associations have specific regulations about yards in the neighborhood. Become familiar with the rules and prepare for the monthly expenses ahead of time.
Chances are, the amount you’ll owe for utilities will increase upon buying a new house. That is, if you previously rented a house or if you are buying a larger house.
So, make sure you look at your monthly household budget, and begin saving now.
You might even check with either friends or family who own a home similar in both size and structure to the one you’re considering. That way, you’ll have a general idea of how much you might pay for utilities.
If you’re obtaining a mortgage, then homeowner’s insurance is a requirement, even if you pay in cash.
Shop around to find the best rate for your needs. And contact your local treasurer’s/auditor’s office to get an estimate on property taxes.
How Best to Prepare for Unexpected Costs of Buying a Home
Now, save, save and save some more!
Few things are more disappointing than finding a house you love then getting stopped in the process because you don’t have enough money to cover the unexpected expenses.
After you get estimates in all 5 areas above, save money to build a fund that exceeds the amount by 20%. That way, you’ll be prepared for the unexpected.
And if you need further advice, then give us a call. We delight in helping you navigate the home-buying process.