For many, the purchase of a home is one of life’s most exciting and rewarding experiences. However, for first-time homebuyers who are unfamiliar with the process, there may be hidden costs that can take them by surprise. Before taking the plunge into homeownership, it’s important to understand all of the expenses associated with it.
These can include start-up costs, closing costs, property taxes, mortgage insurance, maintenance and repairs, and more. In this article, we’ll explore some of these hidden costs in greater detail so that prospective homeowners enter the process with their eyes wide open.
Start-up Costs: Before you even get to the closing table, a variety of start-up costs need to be considered. These can include appraisals, home inspections, and loan origination fees. For example, an appraisal usually costs around $300 – 500 and is needed for the lender to determine the value of the property in question. Home inspections should also be considered, as they can help identify potential issues before purchasing.
Closing Costs: Once all the paperwork has been completed and approved, you’ll need to pay various closing costs to finalize the transaction. These costs typically range from 3-5% of the total loan amount, including lawyer fees, title insurance, recording fees, and transfer taxes.
Property Taxes: Property taxes are an ongoing cost associated with homeownership that must be considered. Typically, the amount of tax due is based on the home’s assessed value and can vary from location to location. It’s important to factor this in when budgeting for your new home.
Mortgage Insurance: Depending on the type of loan you take out, you may be required to pay for mortgage insurance. This is usually required for mortgages with less than 20% down payments to protect the lender against default. The cost of mortgage insurance can range from 0.5-1% of the loan amount, depending on the situation.
As you can see, there are a variety of hidden costs associated with homeownership that first-time homebuyers need to consider. Doing so will help ensure a smoother and more successful home-buying process.
With a passion for matching clients with their dream homes, Mary’s experience and knowledge of the real estate market make her a trusted advisor. She’s your go-to expert for buying or selling properties in the heart of the city.
