When buying a home, it’s logical to expect to pay the purchase price. However, purchasing a home requires other expenses that you may not expect. Knowing what these are in advance, and what additional expenses to anticipate, will eliminate any unpleasant surprise both during and after the purchase of a house.
Here are some of the additional expenses to anticipate when buying a home. Take these expenses into account before buying, so you won’t be surprised by them after signing a purchase agreement.
Closing costs. Consider rolling some of these into your mortgage or negotiating with the sellers to pay a portion of these costs. Regardless, you will likely need some additional money to fund your closing costs. Depending on where you live, you should expect costs that run 2-4% of the purchase price of your home.
Taxes and insurance. Depending on your local tax rates and assessed values, real estate taxes generally increase owners’ monthly costs – and many times, substantially so. In most cases, these expenses are paid from an escrow with your mortgage lender. Taxes add costs to your monthly payment. Even if you can eliminate a tax escrow through your lender, you’ll still need to accumulate the funds to pay your real estate taxes on time. Protecting your home produces another requirement – insurance. This can range from a simple homeowners insurance policy to additional policies covering a range of other natural disasters such as flooding, earth stability, etc.
Homeowners association fees, condo fees, and utilities. When you rent, HOA and condo fees are paid by your landlord, as are many utilities such as trash removal and water. Once you own, these responsibilities become your own. So you’ll want to be certain to budget for these expenses.
Extra costs can definitely add up. So, before you buy, prepare a well-planned budget that includes all these additional obligations. It should give you the confidence to proceed knowing you are not getting in over your head.
When are ready to own your own home or buy a new one, please contact me for an appointment. I’ll help you find a home you love within a budget you can afford!
Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
Serving Chicago's North Shore, North and Northwest Suburbs
Get your latest Home Value
Receive Your Personalized Listing Alerts
Let’s Connect, Socially!
Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate market.
Photo courtesy Sufi Nawaz, Stock.XCHNG.