Great news! You just found the perfect home in the ideal neighborhood. However, if you’re a first-time home buyer, you need to prepare for additional—and often unexpected—home-buying costs. Here, Zillow details some expenditures that might catch many home buyers unaware.
Unexpected costs
Homeowner’s insurance and closing costs, such as appraisal and lender fees, usually are easy to plan for because they’re added into the home-buying process. But most costs beyond those vary. If the previous owners of your home take appliances when they move out, you’ll have to buy more to replace them. You also will have to pay for any immediate improvements the home needs, unless you negotiate them as part of your home purchase agreement. And you’ll definitely want to hire a home inspector to look for bad electrical wiring, weak foundations, wood rot and other hidden problems you may not find on your own. Keep in mind, these problems are rarely covered by home insurance. If an inspector discovers a serious problem, you then will have to decide if you still want to purchase the home. Either way, you’ll be out the cost of hiring the inspector.
Creature comforts
Once you move in, you’ll start thinking fully about what you’re expecting from your new home. Are you used to having cable? If so, is your new home wired for cable? It’s much more difficult to watch a technician crawling around punching holes in your walls when you own those walls. And if you’re moving from renting to owning a home, you likely will be faced with much higher utility bills. You also could find yourself paying for utilities such as water and garbage pickup that once were covered by a landlord.
Planning ahead
The only ways to face the unknown and unexpected is with research and planning. This begins with budgeting both before house hunting and throughout your search. Look at homes in your budget that need improvements, and then research how much those improvements could cost. Nothing is worse than buying a home thinking you can fix the yard for a few hundred dollars and then realizing it will cost thousands. There really is no limit to how prepared you can be. For example, you may save money on the list price if you find a nice home that’s priced lower than others in the area because of its age. However, with an older house, you could be faced with a much higher home insurance payment, making the house more expensive in the long run. This is where preparation comes in. Research home insurance and property prices in the areas you’re considering to make more educated decisions before you ever make that first offer. Clearly define how much you intend to put toward your down payment, and then look at how much cash that leaves for improvements and minor costs, such as changing the locks. That way, when you find a house at the high end of your range, you’ll know to walk away if it requires a new washer and dryer or HVAC system upgrade.
Establish a rough estimate for as many costs as you can think of, and be extremely critical of homes at the top of your budget. Otherwise, you could easily end up being house poor.