When it comes to buying a home, many first-time buyers mistakenly believe that the sales price of the home is the only cost they need to worry about. Those that have purchased a home before, however, know that there are other costs involved that need to be taken into consideration. The best thing a first-time home buyer can do is to know what all of the costs are up-front so that there aren’t any hidden surprises down the road.
Taxes: Property taxes can vary greatly from one neighborhood to the next so it’s important when shopping for a home to know what the property taxes are for each individual property. Also be sure to find out if there are additional village taxes that may apply to a certain property as well. You should be able to call your county tax office for up-to-date tax information on any property.
Inspections and Appraisals: Once you’ve found a home that you want to purchase you will need to have the home inspected and the bank will almost always order an appraisal. The homeowner is typically responsible for all of these costs. An inspection should be carried out by a licensed home inspector and costs can typically range anywhere from $300 to $600. Sometimes the bank will choose the appraiser they want to use and for a basic appraisal you may be looking at a cost of around $500. Shop around where you can as you may be able to save a few hundred dollars just by doing so.
Property Insurance: The cost for homeowners insurance will vary depending on the home and the location. The size and building style of the home, for example, will determine the replacement cost of the home which will affect how much dwelling coverage you need. Also, homes closer to the coastline or a body of water may be required to be covered by a flood insurance policy.
Homeowners Association (HOA) Fees: If the home you are purchasing is located in a private community or development (as is often the case with condos, apartments and townhomes) you may be required to pay HOA fees to the community. These fees typically cover costs associated with maintaining the neighborhood such as landscaping and community buildings and pools. If one of the homes you are considering is located in a private community be sure to ask your real estate agent about any possible HOA fees that you would be responsible for.
Closing Costs: Finally, when it comes time to close on your new home there will be closing costs involved that must be paid to the lender, the title company, the insurance company and your attorney. Your closing costs also typically include reserves for your escrow account which are typically a few months’ worth of homeowners insurance and property taxes paid up front. These costs are paid usually by the buyer although sometimes the seller will pay part of the closing costs as well. Your lender should be able to give you an estimate on your closing costs as you get closer to your closing date.
In a recent blog post, we discussed how a home insurance agent can help you estimate the home insurance costs depending on the area and neighborhood the home is located. Your agent can also help you estimate these unexpected costs by looking at similar situations in the same neighborhood.
The professionals at Insurance Planning Service are ready to help you get a free home insurance quote. Call us at 800-220-5582 or contact us today!