5 Forgotten Costs to Buying a Home

So, you think you’ve budgeted to buy a house, but have you thought of everything? Hopefully the answer is yes, however, for many home buyers, especially first-time buyers there may be a few hidden, or unexpected fees that creep their way into your budgets, and if not planned for, could be detrimental to either your buying journey altogether, or cause you financial hardship.

If you’re unsure about what fees you should expect, or need some clarification on the home buying process, Buyers Agent Sydneys wants to remind you to always ask questions, get clarification, and simply be open and honest with your agent to help ensure that your home buying journey runs as smoothly as possible. The 5 main things that many buyers forget to budget for include PMI, closing costs, earnest money deposits, homeowner’s insurance, and overall moving expenses.

PMI

PMI, or private mortgage insurance, is a monthly fee that is added to your mortgage statement if you purchase a home with less than a 20% down payment. Any less of a down payment will require you to automatically pay for PMI monthly. Generally, PMI is anywhere from 0.5%-1.5% of the loan amount, which may not seem like much, but easily adds up when added to your monthly mortgage statement.

Closing Costs

Your down payment unfortunately isn’t the only large sum of money you’ll need when purchasing a home. Closing costs can vary from house to house, however generally cost anywhere from 2-5% of the purchase price, this is in addition to your down payment.

Earnest Money

While Earnest Money does indeed get applied to your down payment amount, you have to pay it once your offer has been accepted, and for some, especially those who are trying to buy and sell a home at the same time, those funds may not be available immediately which makes coming up with the earnest money deposit a little difficult. When starting to house hunt, it is always recommended to have the equivalent of your earnest money deposit readily available should you choose to place an offer.

Homeowners Insurance

All lenders will require that you carry a valid homeowners insurance policy so that they know their investment is protected should any type of damages arise. Homeowners insurance policies vary drastically pending on coverage amounts as well as the style of the real estate such as a condo, townhouse, or single-family home.

Moving Expenses

Did you forget about the actual cost of moving? From moving boxes, tape, moving trucks, hired help, or even simply buying pizza and beer for some friends, there are a lot of little fees when it comes to moving that can add up quite quickly.

While moving in general, and even purchasing a home are often associated with high levels of stress, it is important to try and enjoy the journey as well. By factoring in any and all potential costs, as well as having a safety net or a savings account on standby, you can rest assured that your financial obligations can be met without sweating over every last penny being drained from your accounts.

While buying a house can be a spendy undertaking, making sure you understand all the costs is the best way to afford and budget for your new venture. Other costs may be HOA fees depending on the association or subdivision and while this is not required in every purchase, it can add hundreds to your monthly housing budget if you’re not careful. Planning a head and making sure you are well aware of all the fees, costs, closing costs, inspection fees, appraisals, earnest money and down payment costs will help you plan for the future and budget more accordingly each month.