Homeowners have a lot to consider when searching for their dream house. But even if you’ve established a budget and know your limits, you may be shocked by the hidden costs and unexpected fees when you sign the final papers at closing. Buying a home is one of the biggest investments you will make in life and it’s one that you need to be fully prepared for. Here are the eight hidden costs of home ownership:
- Inspection fees: Homeowners may be caught off guard by the high cost of home inspections. Before you buy a home, you need to have it inspected by a professional. The inspector will look for water damage, pests, termite damage, structural issues, and sometimes water quantity and quality. Home inspections are for your protection, but know that it may cost you hundreds or thousands of dollars to find the house of your dreams. Prepare to spend extra for optional inspection procedures, including septic system and swimming pool inspections.
- Insurance: Homeowners are well aware of the fact that they have to get home insurance to cover property damage, theft, and other unexpected incidents, but they may not know just how expensive this can be. The cost of home insurance depends on a variety of factors including location, home size, and the company you buy your policy from. If you live in an area that experiences bad weather and natural disasters more often than others such as Texas, Florida, Louisiana, Mississippi, Illinois, expect to pay more to keep your home covered under a natural disaster insurance policy.
- Utilities and services: When you buy a home, expect to see a slight increase in your utility bills. Homeowners will be responsible for paying for garbage collection, gas, water and pest services, as well as Internet, cable, and phone services. These added conveniences can be costly and catch unprepared homeowners off guard.
- Closing costs: Closing costs include a variety of fees associated with finalizing a home sale transaction. Closing fees cover everything from the cost of processing the loan, inspection, survey, handling the title paperwork, recording the deed, and other common processes. The amount ranges from 1 to 8% of the home price and can cost an upwards of $6,000 to $130,000. Many homeowners are blown away by the high closing costs, especially after plopping down thousands for the down payment.
- Moving costs: Unless you’ve moved from home to home, you probably don’t know much about the high costs of moving. Homeowners are responsible for hiring a moving company and renting a truck to move your belongings. Don’t forget to take into account the cost of storage and deposits for starting your utilities.
- Maintenance and repairs: Unlike renters, homeowners have to pay for regular maintenance and repairs. And this goes way beyond just making sure the dishwasher is working smoothly and the lawn is mowed. You’ll need to clean the gutters, remove snow, have your chimney inspected and cleaned, replace or repair the roof, and the list goes on and on. If you’re a handyman or know one, you might be able to do these home repairs and maintenance tasks for cheap, but some things will have to be left to a professional.
- Homeowner items: When you acquire more square footage, you’re going to need certain items to fill this space and maintain it. You may have to invest in new furniture, including couches, beds, dining tables, and other decorative items. If you have a backyard, you’ll probably need to buy a lawn mower, snow/leaf blower, hose, and other gardening equipment to keep your landscape clean and well-groomed. When home maintenance and repairs are in your hands, you should consider getting new tools and accessories to get the job done.
- HOA fees and fines: If your home or condominium is managed by a homeowners association (HOA), expect to pay a monthly or quarterly fee to cover maintenance, landscaping, water, sewer, garbage, and other costs. Depending on where you live and the amenities provided by your complex or neighborhood, you may pay anywhere from $100 to $700 per month. In addition to the HOA fees, homeowners are subject to HOA fines. Parking in the wrong spot, painting your home in an unapproved color, and having overgrown weeds are just some of the violations HOA can fine you for.