Managing Unexpected Costs When Buying a Home

As a home buyer, the up-front costs you will face can quickly become more than you originally budgeted for. That is especially true for first-time home buyers who may not have gone through the process before. The fact is that your down payment is usually just the beginning of what you can expect to come out of pocket for, so planning for a little extra cushion will save you a great deal of stress in the long run. Here are a few up-front costs that you can expect to incur:

• Inspection Fees – The fees you pay to a home inspector will vary according to the neighborhood, the type of property you’re buying, and the size of the area being inspected. Larger homes take longer to inspect, and therefore, cost more.
• Lender Fees – This is another fee that will vary from one lender to the next and from one loan to the next. Be sure to ask your mortgage professional about this before getting in too deep. If you’re unsure about the fees that are being quoted to you, simply shop around to get a feel for the market.
• Appraisal Fees – In order to finance the purchase of a home, your bank wants to know that the home is worth at least what you are paying for it. Unfortunately, the cost of that appraisal is going to be absorbed by you, the buyer.
• Homeowners’ Insurance – You will be required to purchase homeowners’ insurance on the property before your transaction can close. You are always free to shop around and choose whatever insurer you like, but most buyers request a referral from their Realtor for this.
• Moving Costs, Appliances, and Renovations – Even if your moving expenses are covered by an employer, those are almost always reimbursed (rather than being paid for up-front). So, you’ll have to plan for that to come out of pocket initially. If the seller takes any major fixtures or appliances as per your sales agreement, you will also need to replace those upon move-in. Finally, if you plan to make any updates, upgrades, or significant renovations prior to moving in, that will also need to be accounted for in your budget.

Purchasing a home is a major expense, so as a home buyer, you want to be prepared for whatever might come your way. What I have listed for you here are the typical costs, but the list is certainly not all-inclusive. Anything can happen, so try to pad your budget to prevent any major issues in your transaction.

If you have any questions about the process of buying a home, I would love to help. Contact me to get started right away.