Most people think of the down payment, the inspection, and closing costs when they think of buying a home. But there are often hidden costs that many of us aren’t quite prepared for, and this is especially the case for first-time homebuyers. Here are some investments you’ll have to make when buying a house and how to plan out your budget on your new place a little more carefully.
Homeowners insurance is a necessity. People who have paid for the home outright as well as those who are financing a home, benefit greatly from homeowner’s insurance. You want to be prepared if a fire or theft occurs on the premises. The average premium from homeowner’s insurance is over $1,000. The insurance should factor in the replacement cost for the property. You can get the most competitive rates by shopping around.
Home maintenance costs like gutter cleaning or HVAC servicing should be factored into the budget. According to research, basic home maintenance averages $3,021 a year. You can anticipate spending approximately 1 to 2 percent of the overall value of the home. Smaller homes like condominiums and townhomes have lower costs in comparison to unattached, single-family homes, but home maintenance costs should still be factored into the annual budget.
Home Emergency Fund
There is never a good time for a water heater to break and a roof leak is usually a surprise for any household. These types of repairs are emergencies that all homeowners should be prepared for in planning. You can expect to pay over $2,000 to fix a major roof leak. You can budget for $1,000 to replace a bad water heater. As homeowners, you should expect to set aside $10,000 for emergency home repairs. It isn’t uncommon for a minor repair to become a major project as other defects or issues are discovered along the way.
The average property tax bill for the homeowner is $2,127. Counties surprise residents with marginal increases in property in taxes. When property taxes increase, they aren’t guaranteed to increase at a certain rate. Homeowners have to be prepared for surprise increases. It isn’t impossible for a property tax bill to increase by double-digit percentages.
You may come to a point where your credit standing has improved, and you want to pursue other finance options for your home or mortgage. You can expect to pay up to $300 to record that transaction at the county. You can also expect to pay 1.5 percent in closing costs if you refinance. Those who have served our country have the added option of VA refinance rates which are often a good deal.
A prospective homeowner has probably done their homework when it comes to preparing for a new home. Closing costs, inspection fees, and down payments are usually the focal point. Once the person moves in, there are usually costs that can take a person by surprise. Don’t let yourself be surprised by any of these.