While you may know that you will need a down payment to buy a home, there are other costs associated with a real estate purchase. Many of these expenses are included in the closing costs, and they typically include appraisal fees, hiring a home inspector, and paying for title insurance. Overall, you should expect your closing costs to account for 3% to 5% of your mortgage. Additionally, there are other hidden costs you’ll face in buying your home.
While this isn’t necessarily a hidden home ownership cost, you should be aware that you’ll need to have a homeowner’s insurance policy in place. In addition to being a standard requirement made by mortgage lenders, maintaining insurance will protect you from a variety of threats. The cost of homeowner’s insurance will depend on your geographic location, the value of your home, and the type of coverage you obtain. A typical policy will provide you with protection for your personal belongings and provide liability protection in addition to covering your home’s physical structure.
You will also have to start paying fees for membership in your homeowner’s association if you buy into a community that has an HOA. The fees are used to cover the general maintenance and upkeep of the community. On average, HOA fees range between $200 to $400 per month, but they can fall outside that range if you buy property in a more upscale community. Your real estate agent can give you specific information about the homeowner’s association for any property that interests you.
Repairs and Upgrades
Once you move into your new home, you will be responsible for any repairs that need to be made. While the seller is required to disclose information about the need for significant repairs, there may be undiscovered issues with the home. It’s a good idea to have about $5,000 set aside to cover emergency repairs. This may seem like a lot, but just replacing a water heater can cost you up to $3,000.
You should also set aside some money to hire a real estate attorney. While you’re not required to hire a lawyer, doing so can benefit you throughout this process. In general, your lawyer will look out for your interests and ensure you’re not exposed to unfair practices. Hiring a real estate lawyer can end up saving you significantly in upfront and long-term costs.