After searching around, you finally found your dream home and you’re feeling pretty excited. The neighborhood seems great, the house itself is charming, and most importantly, the price is right – or at least, the asking price is right.
But what you could end up paying may be much more than just the asking price. You need to be prepared for some additional, and oftentimes unexpected and hidden costs that many home buyers are unaware of.
For pretty much everyone who buys a new home, the initial investment isn’t just your down payment. Certain expenses, such as closing costs and homeowners insurance, are easy to prepare for because typically they are included in the buying process. Beyond that, additional costs will vary.
The most significant factor to affect your home-buying costs is actually the previous owners of your home. For example, if they decide to take the washer and dryer when they finally move out, you’ll be the one having to buy new ones to replace them. The same applies for any large appliance.
Although that might seem like a minor purchase in comparison to the actual house, appliances can add up quickly – especially if you spent most of your savings on your down payment.
You will also be responsible for any renovations the home may need – unless you negotiated those as part of your purchase agreement.
Before actually purchasing a new home, you should always hire a professional home inspector (which also costs money!) to ensure your new home isn’t going to fall apart during the next big storm. Inspectors will search for everything, including hidden issues you might not find our of on your own.
Even worse, those problems are most-likely not covered by homeowners insurance. If your inspector discovers a serious problem, you will have to decide whether or not this is the home for you. Either way, you already paid for the cost of the inspection.
Another hidden cost is actually your own personal comfort. In fact, there are any number of minor considerations you might not even think about until after you’ve already moved into your new home.
Are you accustomed to having fiber-optic cable or high-speed internet? If so, do you know if your new house even wired for fiber-optic cable? It is so much harder to watch a technician crawl around and punch holes in your precious walls when you are the one who owns the walls.
If you are moving out of the world of landlords and renting to homeownership, you will probably be confronted with higher utility bills. You may even find yourself dishing out money for utilities that used to be covered by your landlord, such as water or weekly garbage/recycling pickup.
Do your homework
The most efficient way to plan and prepare for the unexpected is by thoroughly researching and planning. This begins with creating a budget BEFORE searching for your new home.
Be sure to check out homes within your budget that require improvement, and then do the research on how much those improvements may end up costing. One of the worst feelings in the world is buying your first home and thinking you can fix the lawn for a couple hundred dollars, only to find out it will actually cost thousands.
Honestly, you can never be too prepared. Let’s say you discover a nice house that is priced lower than other homes in the same area because it’s an older home. You could potentially save money on the listed price, but you could also be hit with a much more expensive homeowners insurance payment, ultimately making the home more expensive.
This is where research comes in again. Be sure to research homeowners insurance in the areas you are considering, in order to make better decisions before making your first offer.
You should also clearly decide how much money you plan to put towards your down payment. After that, you can see how much cash that leaves you with for both large and minor improvements, such as changing all of the locks. This way, when you do see a house at the higher end of your price range, you will know you should walk away if it requires a new dishwasher or HVAC system overhaul.
Plan ahead and know your budget, because buying a home is a lot less intimidating when you know what you’re getting yourself into.