At Ali Safavi Real estate we know home buying is expensive. The market keeps rising, and for many, that makes the prospect of buying a new home even slimmer. However, for many owning a house is a life goal, and one their not about to abandon. So they set their price and save, then save some more, then finally one day, they hit that magic number – the down payment. Now all they need is the right property (Ali Safavi Real Estate can help you with that).
Fastwardward a few days, or weeks, or even months, and you finally pick a place. It fits perfectly in your price range and you’re ready to put down that coveted down payment. Now you just clap your hands and pay your monthly mortgage, right? We wish. There are a plethora of out-of-pocket costs that crop up during the purchasing process, or even when you’re moving in, that can put an unexpected strain on your freshly emptied bank account.
For starters, you’ll need to budget between 2% and 5% of the home’s purchase price for closing costs, including appraiser, lender, and title fees. New regulations passed last year mean lenders have to be more transparent about these fees. So, as long as you take the time to read all the documents (yes you have to) then you should be well aware ahead of time of the fees involved.
Think you’re done? Think again. Those closing costs only make up a portion of the hidden expenses you’ll face.
Nearly half of homebuyers incurred more than $2,000 in unexpected charges during the homebuying process, according to a recent survey by TD Bank, and 10% spent at least $5,000 more than they expected.
These costs can cause major sticker shock. We see it all the time at Ali Safavi Real Estate – new buyers or investors with that “I’m burning through money” look on their face. While we can’t help you avoid the added fees, we can prepare you. Here are the big ones:
1. Update Costs
Just setting foot into your new home can run up the bill. Not even taking into account furniture, items like new locks and windows are always a good idea to get replaced or updated. And remember, there is no landlord to fix a dripping sink. It’s important to remember that most likely, within the first year, at least one major repair will have to take place.
Ali Safavi Real Estate Tip:
Try to set aside a few thousand dollars that you can dip into for just housing expenses. That way you won’t have to turn to credit cards (Let’s deal with one debt at a time).
2. Moving Costs
Moving sucks. Not only do you have to sift through piles of junk, you then have to pay for that junk to be moved to a new location. Some of you may to UHaul everything yourself, and more power to you. For the rest of us, according to My Moving Reviews, the average cost of an interstate move can run you upwards of $4,000.
3. The inspection
Before you pay to have your stuff moved in, you’ll usually need to pay an inspector to give the home a once-over. Best to get this out of the way when the house is completely empty. If he finds any potential problems — structural issues or asbestos, for example — you may have to pay another specialist to come in and offer a professional assessment.
Ali Safavi Real Estate Tip:
Don’t skip this step. Honestly, it’s a few hundred dollars for peace of mind.
4. Closing Costs Are Just the Begining
Closing Costs are like the Kardashians, everyone has heard of them. However, there is always a non-famous relative in the other room. In this case, that non-famous relative is hidden fees. Many lenders require you to pay a year’s taxes and mortgage upfront. If the seller prepaid any taxes or homeowners association dues, you’ll have to pay her the prorated amount for the rest of the year or quarter.
This article is not meant to dampen your excitement about a new house. Ultimately, it can be a wonderful and fulfilling experience. It really comes down to mental preparedness – know that there could be another $10,000 or more beyond just the sale itself. But once you’re prepared for the worst, you’ll have more time enjoying the best of your new home.