I often get asked how much it really costs when buying a home. What expenses do I need to plan for?
Well obviously there is the purchase price of the home, generally put into a 30 year loan. Your lender will explain the interest rate, tax and insurance escrows, appraisal fee, PMI, and closing costs. These fees are expected.
What isn’t always expected are the extra fees involved in home ownership.
When you write an offer on a home, you need to give an earnest deposit with your offer. A typical earnest deposit is about 1% or more of the price of the home you are writing an offer on. It’s your money and will be applied to your closing costs at closing unless you decide to walk away from the offer for no reason. In that case, the Seller gets to keep that money.
A home inspection is another cost that is well worth the money. As the Buyer, you will pay for your own home inspection. They can range from $250 to $500 depending on the size of the house. Once you receive the report from the inspector you may ask the seller to make repairs to the property, but they may or may not make those repairs. At that point it is all negotiable between you and the seller. In some instances repair costs are split between the seller and the buyer.
Another cost might be a Radon inspection. This costs about $125 and is done at the time of the home inspection. If Radon levels are found to be high, then you can ask the seller to install a radon mitigation system. Sometimes the cost of the system (about $800) is split between the seller and the buyer.
Home Owner Associations (HOA) charge another annual fee. A lot of subdivisions have these associations in place to make sure that their neighborhoods are well maintained. HOA fees can range from $30/year to several hundred a year, depending on the neighborhood. So this is something you definitely want to ask your Realtor about once you decide on a home. If you are considering a condo, townhome or villa, then there are monthly association fees that pay for lawn care and snow removal as well.
Of course once you get into your home you have your monthly utilities. You will be paying for electricity, gas, water, sewer, trash removal and most likely cable and telephone services. All of which can add up to several hundred dollars per month.
Of course there may be many other little things that come up in the course of buying a home, but being flexible with negotiations helps things move along smoothly. I also strongly recommend working with a buyer’s agent who knows your market and can help guide you through the entire process.
So is it worth it? Absolutely! There is nothing like owning your own home.