4 costs you haven't factored into your homebuying budget - Jun. … · 2008-05-04 · 4 costs you...
Transcript of 4 costs you haven't factored into your homebuying budget - Jun. … · 2008-05-04 · 4 costs you...
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4 costs you haven't factored into yourhomebuying budgetby Beth Braverman @CNNMoney
June 26, 2017: 10:32 AM ET
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It's not cheap to buy a home these days, and we're not just talking about the price of the homeitself.
Other out-of-pocket costs that crop up during the purchasing process, or even when you'removing in, can put an unexpected strain on your already-hurting bank account.
For starters, you'll need to budget between 2% and 5% of the home's purchase price for closingcosts, including appraiser, lender, and title fees. New regulations passed last year mean lendershave to be more transparent about these fees, and (as long as you read your closing documents)you should have a relatively good idea of what they'll be when your lender makes you an o�er.
Unfortunately those closing costs only make up a portionof the added expenses you'll face.
Nearly half of homebuyers incurred more than $2,000 inunexpected charges during the homebuying process,according to a recent survey by TD Bank, and 10% spentat least $5,000 more than they expected.
"Most people just look at the sticker price of the houseand the mortgage payment," says Svenja Gudell, chiefeconomist at the housing site Zillow. "But there are a lot
of additional costs that can shock first-time
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of additional costs that can shock first-timehomebuyers."
1. The inspection
Once you've made an o�er on a property, you'll usuallyneed to pay an inspector a few hundred bucks to givethe home a once-over. If he finds any potential problems-- structural issues or asbestos, for example -- you mayhave to pay another specialist to come in and o�er aprofessional assessment.
While itcan be
tempting to skip the inspection to save cash (or to makea more attractive o�er to a seller), it's worth the outlay toget peace of mind that the home is in good condition --
or negotiating ammo to make sure the price reflects the necessary repairs. "It's money wellspent," says Cindy Hamann, chair of the Houston Association of Realtors.
2. Bringing cash to the table
Homebuyers are also often surprised with the extra cash -- beyond closing costs -- that theyneed to spend at the closing table. Many lenders require you to pay a year's taxes and mortgageupfront. If the seller prepaid any taxes or homeowners association dues, you'll have to pay herthe prorated amount for the rest of the year or quarter.
"Once you're done with all the fees and the deposits for reserves, you may end up bringing manymore thousands of dollars than you thought to the closing," says Keith Gumbinger, vice presidentof HSH.com.
3. The move
Once you've o�cially closed, you'll need to pay for the move itself. That cost will varyconsiderably depending on where you live, how far you're moving, and how much stu� you'llneed to haul. In general, though, expect to pay at least a few thousand dollars for professionalmovers.
It's easy to overpay for movers, so get quotes from a few companies, and hire someone who'slicensed by the Federal Motor Carrier Safety Administration and has good reviews online (evenbetter if you can get a referral from a friend).
4. Immediate costs
While you may be able to put o� renovations or furniture purchases, there are some costs thatnew homeowners face right away. You'll likely want to hire a locksmith to change the locks, forexample, and there could be deposits or setup fees for getting your utilities started.
As a new homeowner, you'll also now be on
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As a new homeowner, you'll also now be onthe hook for both routine, and unplannedmaintenance costs on the home. Experiencedrealtors say you should expect something tobreak or need replacing within your first year.
Set up an emergency savings account with atleast six months of expenses that you can tapif your roof springs a leak or the heatersuddenly stops working. That way you won'thave to turn to credit cards to cover theunexpected, and you can spend some timeenjoying your experience as a newhomeowner, rather than worrying about howyou're going to pay for it.
CNNMoney (New York)First published June 26, 2017: 10:32 AM ET
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