Owning a home is one of the most significant achievements anyone can look forward to. However, this, in most cases, is easier said than done. It may take years of hard work and sweat before you can finally feel comfortable enough to scout for a home to buy. When this time finally comes, however, you will have to contend with the various processes involved in home buying ranging from dealing with brokers to dealing with agreements and lawyers. When it comes to home buying, one of the obvious factors will be the costs involved.
While the cost of buying a home will usually be revealed before or during the buying process, this may not be all there is to it. Often, there will be other additional costs to the process that you may not notice straight away. This is especially so if you have been renting an apartment and are now a first time home buyer. These unexpected costs can easily deal a significant blow to your endeavors and can negatively affect your previously estimated return on investment. As such, you must get acquainted with some of these unexpected costs beforehand. The following are some of these unexpected costs:
When buying an investment property, you want to ensure that you are getting value for your money. This is where a home inspection comes in. If you are looking to avoid some unnecessary spending on factors like renovation and repairs, then you may see the need to do a home inspection. This process will eventually add to the initial cost of the house, but in the end, it will be worth it.
Investment property taxes
Depending on your state, you will be required to pay for property taxes for your investment. This is not usually disclosed during the sale. As such, you will need to do due diligence and background checks to confirm the rates of property tax in the said state. Generally, the average cost in taxes for real estate investors is $2000 per annum. On the other hand, you may also see the need to buy your home in states that do not have property taxes.
This may look ridiculous, but your heart can sometimes play a great role in disrupting your initial budget and you end up spending more on a property. For instance, you may have set aside a given amount for your homeownership. However, in the course of your home hunting, you come across a property that is just too good to let go, but the price is way above your budget. In such scenarios, most home buyers fall for this allure and will end up expanding their budget just so they can afford the said property. To avoid this, always make your financial decisions based on your realistic projections and budget rather than simply following your heart.
When you buy a ready home, this does not necessarily mean that you will be contented with every design and feature in the property. You will want to add some personal touch to the home. Whether we are talking of improving the landscaping, adding shutters, flower boxes, or even putting up a paved walkway to the house, all these will add to the initial costs of your homeownership.
The condition of your lawn says a lot about you. Lawn maintenance is one of the recurring costs that you, as a homeowner, will have to deal with. This may come in terms of contracting out lawn cutting, pest control, and fertiliser. You may also see the need to add new trees, grass species, and flowers.
Right from the first cleaning process before you move into the regular cleaning, you can be sure to fork out a good amount in the process. Whether you decide to buy the cleaning equipment and products or contract a cleaning company, this is an additional cost to your initial homeownership budget.
Security and safety
While living in a rented house, security would be the least of your worries as this would be taken care of by the landlord. As a new homeowner, however, you will realise that these costs are not on you, and you have to contract a security firm, or better still buy security gadgets like cameras and alarms. This adds to the overall cost of owning the home.
Picture this; a delivery truck has accidentally run through your perimeter wall, floods have sipped through your home, and you have to act. These are some of the emergencies you will have to cater to and will usually cost you a big deal. In other cases, you may realise when it is too late that your neighborhood is prone to power outages. In such a case, you will need to seek additional funds to install a backup power system. For such emergencies, however, you have the option to go for online payday loans in case you are caught off-guard without any savings at hand.
As a first time homeowner, you may sometimes get too excited that you have found a home in a perfect setting and location. However, you do not consider how the nearby construction or land can easily affect your ‘perfect’ location. That fantastic view by your balcony can be easily blocked by your next-door neighbor who decides to put up a four-story condo. When this happens, you not only get inconvenienced, but the value of your home drastically drops even when you decide to sell it off.
Apart from the costs involved in education, food, and clothing, your children can cost you a big deal thanks to their playful nature. Once in a while, you will have to contend with a broken window, drawings on the wall, broken flower pots, and much more. These also add to the costs of constant repairs to the same.
First-time home buyers may not realise how closing fees can slowly but surely increase over the buying period. By the time the deal is done, you may be surprised that the closing fees have increased to up to 10 percent of the buying price. The closing fees may range from attorney fees, loan-related fees, escrow account fees to mortgage insurance fees.
As a first time homeowner, you do not want to get too excited about the advertised cost of a home. It would be prudent to appreciate the fact that there are more additional costs that may not be revealed straight up. As such, it pays to have some reserve funds to cater for these unexpected costs. This will keep your home buying process much smoother and less of surprise costs.