Buying a home is really exciting! However, there are some home-buying costs that you need to be aware of. The last thing you want to do is be caught off guard or short on cash when you are buying a new home. Of course, there are always going to be unexpected costs that come up when you buy a home. If you make sure you prepare for the following costs, you will be in good shape.
Home Buying Costs That You Need To Be Aware Of
Home inspection
Getting a home inspection should be number one on your list when you buy a home. It is the way to make sure you don’t inherit serious mold problems or a broken furnace when you purchase your home. Your home inspection covers your home’s main systems: heating and air, plumbing, and electrical. It also covers the basic structure like the roof, attic, walls, ceilings, floors, windows, doors, foundation, and basement. A home inspection generally costs between $300 and $400, depending on where you live and the size of your home.
A home inspection does not address the cost (like a home appraisal). Once the seller accepts your offer, you will have to get a home inspection within 10 days. If the inspection shows anything negative about the house, you will have a window of time to address that with the owner and possibly adjust the price or get issues fixed.
Closing costs
When you put an offer in on a house, pay careful attention to who is paying the closing costs. The buyer or the seller can pay closing costs. Whoever is defined in the contract you sign when you buy the home is who will be responsible for paying the various fees (loan origination fee, discount points, appraisal fees, title searches, surveys, taxes, deed-recording fees, and credit report charges) included in the closing costs.
Moving expenses
Whether you move yourself with the help of friends or you hire a moving company, you can bet that there are going to be some unexpected expenses. Get accurate quotes with a moving company well before closing day so there are no surprises. If you plan to move, don’t forget to estimate the cost of boxes, tape, and gas for multiple trips and buy a meal for your faithful friends who help you.
Immediate move-in costs
Even if you don’t want to make any improvements to your new home, you will probably want to at least get the locks changed. You have the option to buy your locks at a big box store and change them out yourself or call a locksmith to do it for you. Generally speaking, you will pay anywhere from $30 to $100 per door depending on the type of lock you choose.
You will also have to pay upfront to make sure your utilities like power and water are turned on. Communicate with the current owner and the utility company to make sure there isn’t a lapse in the old owner dropping utilities and you picking up the payment. You don’t want to unpack in the dark or spend your first night without flushing toilets or air conditioning.
Private mortgage insurance
If you don’t put down 20 percent on the purchase price of your home, you may have to pay for private mortgage insurance. Usually, the private mortgage insurance premium is added to your monthly payment. Sometimes you will have to pay a one-time payment at closing. The third option is to make both an upfront payment and a continuing payment. Make sure you go over your options with your lender and choose what is affordable for you.
Earnest Money
Earnest money is pretty self-explanatory: it is money you give the seller to show that you are serious about your offer. The amount of earnest money you need to pay varies. It is usually one to three percent of the total sales price.
Appraisal fee
Getting your new home appraised will show you how much it should cost. Appraisals take the condition of the home into account. It also compares your home to what other similar homes have sold for. Appraisals are generally $300 to $500 depending on the property. Larger homes or those with unique features will be on the higher end.
Maintenance and upkeep
Buying your own home is the start of being totally responsible for your own place, which is good and bad. If you are coming from renting to buying, you will have to adjust to making all home improvements and fixes on your own. No more calling the landlord when the air conditioning goes out. Any problems you have will be coming out of your own pocket. You will need to have a savings fund set aside to be able to repair your heating and cooling system, fix appliances, and do yard maintenance.
Your help during the home selling/home buying process
At Ben Buys Indy Houses, Ben is experienced in getting homeowners the cash they need to be able to move on and buy the home of their dreams. He has helped many Indianapolis residents sell their homes for cash and get a great price. Give Ben a call if you have any questions or to get a quote on your home.
