In 2009, my husband and I bought our first house, and it was a faster process than either one of us imagined it would be. After looking at ten houses, we fell in love with the last one on our list, and we were handed our keys within three weeks of our offer being accepted.
Home, sweet home? Not right away as we were hit with some unplanned expenses. Luckily, it turned out all right for us, and we persevered through some tough financial times without any additional debt.
As we found out the hard way, introductory research is key to making your dream house a home. Here are five expenses to consider before you sign on the dotted line:
1. Closing costs
Closing costs pay for various fees such as title insurance, inspections and legal work. And they can add up quickly.
Some homebuyers may be able to negotiate closing costs into their final deal, but if you can’t, you may have to pay thousands of dollars extra before you get the keys to the home. Before making your offer on your dream house, I recommend working with your realtor to find the best way to approach payment of the closing costs.
If you choose to buy a home, prepare to add home insurance to the list of other insurance dues you pay every month.
Insurance costs can vary depending on the value of the home, average claims in the town, weather characteristics and so on. It is something you will need to have before you can get the keys to your house, and it’s something you will want to have as well. Home insurance can help protect you in events such as natural disasters, robberies and other damage.
3. Property taxes
Property taxes help pay for town amenities, such as schools, libraries, sidewalks and parks. These taxes are an expense that can vary widely from home to home, so it is always a good idea to get an estimate of what the property taxes would roughly be before you buy a home.
4. Homeowners association fees
Some homes, whether a house, townhouse or condo, are part of a homeowners’ association. I’ve heard of homeowners’ association fees being as low as $50 per month and some being over $1,000 per month. Before you even make an offer, you should be aware of what the monthly and/or yearly fee is if your house is part of a homeowners’ association.
5. Utility bills
Just like with everything above, utility bills can fluctuate, and you may be surprised by how different your utility bills are than at your prior residence. Understand the structure of the house and think about utility bills related to electricity, gas, propane, water, trash and sewage. While those 14-foot ceilings are gorgeous, you may see a much higher bill come winter!
As you can see, there are many expenses people should think about before they buy a home. By keeping the above list in mind, you are likely to start your homeownership life on the right foot. Happy house hunting!