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5 Hidden Costs of Home Buying to Look Out For

Written by Posted On Wednesday, 04 May 2016 15:26

When you purchase a home, you expect that you'll be making the down payment as well as the monthly mortgage payment. But what are some of the hidden costs you may not be prepared for? Read on to learn more about five home-buying costs that catch many buyers by surprise.

Home Inspection

Most lenders require a home inspection to identify any costly problems with the house that would prevent them from granting a mortgage. While this is a critical step, since it also keeps you from purchasing a property that's a lemon, the home inspector fees will cost you a few hundred dollars. A separate termite inspection is usually an additional fee.

Appraisal Fee

In addition to requiring a home inspection, most lenders will also hire an independent certified appraiser to assess the property value of the home. This cost is passed on to the buyer, and typically runs from $250 to $600. In return, you'll get a document that outlines the various features of the house, an appraised value, and comparisons to similar homes in your neighborhood.

Homeowner's Association (HOA) Fee

This monthly fee is usually required for condos and townhomes, and varied widely depending on the community in which your home is located. Ranging from less than $100 a month to a few hundred, these fees often cover things like lawn maintenance, snow removal, landscaping, repairs, and recreation facilities such as a pool. Even if you're buying a single family home, HOA fees may be required, so be sure to check with your realtor and factor this cost into your monthly housing budget.

Moving Costs

If you plan to move into your new home, as many home buyers do, you’ll probably need to hire a moving service to help you relocate. According to a specialist with EXIT Lakes Realty Premier, these moving expenses may cost more than originally anticipated, so it’s a good idea to set aside some funds for the transition ahead of time.

Private Mortgage Insurance (PMI)

You will have to pay PMI if you have a down payment of less than 20 percent of the total amount of the loan. This monthly cost is usually a couple hundred dollars added to your mortgage payment, and can be removed with an appraisal when you earn 20 percent equity in the home's value.

As you prepare to purchase a home, keep these items in mind as you save the needed funds and develop your monthly budget. Being aware of hidden costs can help you avoid expensive surprises.

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Emma Sturgis

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