The most common home buying expenses can easily be unexpected ones. There are simply costs which homebuyers don’t think about and factor into their budgets. (That is until they pop up and must be accounted.) Some home buying expenses are all too obvious and you know to plan for these way in advance. But, there are others which also come with a house purchase. Then, there are other, smaller expenses which you’ll incur when doing a few things right after moving into a new property.
What are the Most Common Home Buying Expenses?
Keep in mind, none of these include scenarios like buying a home that’s sold in as-is condition. In that case, there will likely be more huge expenses, such as rehabilitation and renovation. The truth of the matter is, even people who have been through the house hunt and home buying process before forget about some of these costs. It’s a stressful time that causes most people to be overwhelmed and it’s usually full of surprises.
For many aspiring homebuyers, saving enough money to cover the initial expenses is a major hurdle on the path to homeownership. Even low-barrier loan programs will require you to have some cash available to complete the purchase. The amount of cash you’ll need to have available to complete your home purchase depends on multiple factors, primarily the price you paid for the house and the type of loan you’ve acquired. —Home Finder.com
When you decide to buy a house, you think about the initial expenses, particularly the down payment. And, that definitely makes the list. But then, you start thinking about all those other things you’d like to have in your new place. So, you begin dreaming about new furniture, some beautiful home decor, and perhaps things like outdoor furniture. Understand that it takes a long time to get to the actual day you’ll apply for mortgage pre-approval and start house hunting. Here are the most common home buying expenses to plan for:
- Down payment. Okay, although this is obvious, it makes the list because too many would-be homebuyers try to put as little down as possible. That’s a bad idea for several reasons. Among them are you’ll be limited in your mortgage options, you’ll have a larger monthly obligation, and you’ll have to pay private mortgage insurance. It’s worthwhile to be ready with a 20 percent down payment.
- Earnest money deposit. The good faith deposit or earnest money deposit will vary depending on the seller and other various factors. In general, you’ll probably be requested to deposit 1 percent to 2 percent of the purchase price. That’s certainly not an insignificant amount of money, so you need to be prepared.
- Inspections. Next will be the inspections. Here in the state of Florida, it’s common to conduct a home inspection, a wind mitigation inspection, and a pest inspection. Some lenders and insurers actually require one or more of these inspections and these range in cost about a few hundred dollars each.
- Moving. For some strange reason, moving costs are one expense buyers either underestimate or don’t just really plan on paying. Do your research before you start your actual home search to learn about different companies and budget for their estimates.
- Closing costs. The average cost of closing on a home sale is between 2 percent and 5 percent. The general average buyers pay is $3,700. While this can often be rolled into the mortgage, it’s best to avoid doing so because it will cost you more over the long-term.
If you are ready to buy a home, be sure to work with an experienced real estate pro to learn about the local market. Please feel free to phone 407-616-7286 to get the personal attention and representation you expect and need on your home buying journey.