4 costs you haven’t factored into your home buying budget

Originally published on CNN Money


Buying a home is often the largest investment we will make. Don’t let out-of-pocket costs surprise you during the purchasing process.

For starters, 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, you should have a relatively good idea of what they’ll be when your lender makes you an offer.

Nearly half of homebuyers incurred unexpected charges during the homebuying process, according to a recent survey by TD Bank.  We want you to be prepared.

  1. The inspection 

Once you’ve made an offer on a property, you’ll usually need to pay an inspector to give the home a once-over. If they finds any potential problems — structural issues or asbestos, for example — you may have to have another specialist come in and offer a professional assessment.

While it can be tempting to skip the inspection to save cash, it’s worth the outlay to get peace of mind that the home is in good condition. “It’s money well spent,” says Cindy Hamann, chair of the Houston Association of Realtors.

  1. Bringing cash to the table

Homebuyers are also often surprised with the extra cash that they may need at closing. Some 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 them the prorated amount for the rest of the year or quarter.

  1. The move

Once you’ve officially closed, you’ll need to pay for the move itself. That cost will vary considerably depending on where you live, how far you’re moving, and how much stuff you’ll need to haul. In general, though, expect to pay at least a few thousand dollars for professional movers.

It’s easy to overpay for movers, so get quotes from a few companies, and hire someone who’s licensed by the Federal Motor Carrier Safety Administration and has good reviews online (even better if you can get a referral from a friend).

  1. Immediate costs

While you may be able to put off renovations or furniture purchases, there are some costs that new homeowners face right away. You’ll likely want to hire a locksmith to change the locks, and there could be deposits or setup fees for getting your utilities started.

As a new homeowner, you’ll also now be responsible for both routine, and unplanned maintenance costs on the home.

Set up an emergency savings account with at least six months of expenses that you can tap if your roof springs a leak or the heater suddenly stops working. That way you won’t have to turn to credit cards to cover the unexpected, and you can spend some time enjoying your experience as a new homeowner.

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