Making the decision to buy a home is a really big deal really shouldn’t be taken lightly. Many people simply aren’t ready to buy, and there is nothing wrong with that. One of the things that goes into this purchase, which you might not even be aware of, are the hidden costs of home ownership that some Real Estate professionals keep hidden…
So what are some of these “hidden costs”? Here is a brief list of some of the most common costs that many fail to account for:
Moving - Varies based on how much help you hire and the size of the space (see our previous article for details here)
HOA / Condo Fees - These are usually spelt out by the lender, but the fees can change over time.
PMI (Private Mortgage Insurance) - Comes when you put less than 20% as a down payment.
Closing Costs - Usually these come out to about 2-5% of the homes value in the form of lender fees, appraisal, escrow fees, and prorated interest to name a few.
Home Inspections - If you aren’t fully aware of the process than this cost to get the inspection on your potential home could come as a surprise. Typically around $500 in the DMV area. This also opens up negotiations which can give some insight into the renovation costs.
Renovation Costs - When walking through a new home everything seems perfect. After about a month you might start to notice little things, and these little things add up.
Taxes and Insurance - Many times this is rolled in with the mortgage, but not always. Understanding your PITI (mortgage principal, interest, taxes, and insurance) is a necessity.
Ongoing Maintenance & Repair - Getting a home warranty will help in a big way when the larger appliances start to go, but not so much for the smaller items. 4% is a good number to keep on hand for these potential expenses.
Obviously this isn’t an all inclusive list, but it is a good place to start when it comes to preparing for all those hidden costs of homeownership