Purchasing a Home for the First Time? Here Are 5 Hidden Expenses you need to know

Purchasing a home for the first time? You’ll definitely want to know some hidden expenses when signing the paperwork.

Searching for and purchasing a new home can be exciting and nerve-racking. If this is your first time buying a home, those feelings can be even more heightened. This is why you should know that the home you’ve chosen’s list price is not the total you’ll be spending. You’ll want to ensure you have everything you need so that you can be prepared for any situation that may arise. You’ll want to know some hidden expenses when signing the paperwork. Learning about those expenses ahead of time will make it easier to be excited when closing day comes. Here are some important things to keep in mind:

Bigger Utility Bills

Every home is different. Utility costs vary based on the home’s size, location, and the types of utilities it requires. According to move.org, the average home spends about $111 on electricity per month. Compare that to a two-bedroom apartment at $30 to $50 per month, which can add up. It stands to reason that the larger the living space, the higher your energy bills will be. This can be easily overlooked when you’re in the midst of purchasing a new home. Don’t let that stop you from being excited, though. Simply consider this when it comes to your overall budget.

Hidden Expenses – Closing Costs

Most of us have heard about closing costs, but what are they really? These fees can consist of several different things and vary from home-to-home. For the most part, though, the term “closing costs” refer to lenders’ fees, a down payment on home insurance, miscellaneous taxes, and title insurance. These are the main culprits of closing costs, but depending on your own unique situation, they may be more or less. You can generally expect to pay between 2% and 5% of the home’s value in closing costs.

Maintenance and Repairs

One of the biggest perks of living at a rental property is that you simply have to call your landlord whenever something breaks or malfunctions. They’ll also take care of landscaping such as snow removal and lawn cleanup. When you are purchasing a new home, it is always a good idea to have a home inspection. This way, you’ll know what you’re getting yourself into. You may also want to keep a savings’ fund specifically for maintenance and repairs, which are inevitable when you own your own home.

Property Tax

Though it varies from state-to-state, the average American will pay over $2,000 per year in property taxes. In some states though, such as New York, you’ll be paying even more, which on average, is close to $7,000 per year. This cost is definitely something you’ll want to consider when purchasing your new home, which is often overlooked when you are a first-time homebuyer. Property taxes are typically lumped into your per-month mortgage payment, making them a bit easier to pay. But, on top of other lumped-in fees, property taxes will increase your monthly payment and can potentially increase year-over-year. This is important to remember when deciding what kind of money you’ll be spending on the list price.

Mortgage Loan Interest

Mortgage companies are not going to let you borrow money without taking their own safety precautions. In that, they will charge you interest to ensure that their risk in trusting you to pay your mortgage accurately and on time is lowered. This is another expense, which will be tied into your monthly payments. Average mortgage interest rates depend on your credit of course, but you can expect to pay anywhere from 3% to 8% on a 30-year fixed rate mortgage.

Purchasing a new home requires time and research. You’ll want to make sure you are making the proper choice in buying the home of your dreams. Though the option is yours and yours alone, Arpin will be there to help with your moving stress when you finally put in that home offer. Simply visit our hubs to find a local agent, or start your move quote today.

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