Preparing For the Home Buying Expenses

Buying a house is often a long and expensive process. You may look at several houses before finding one that you are interested in. Once you've found a house that fits your needs, your main concern is the price that the sellers are asking for it. This is one of the few costs in the house buying process that's fairly straight forward.

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You may try to negotiate a lower price with the seller, and you may or may not get the deal that you asked for. But, once you've settled on a purchase agreement, the hidden costs start appearing. Many of these costs are blanketed under the term "closing costs" which include everything from taxes, to title fees and hazard insurance. You will be asked to provide some "earnest money" which will cover some of these things, the rest of the closing costs are paid by the seller, built into the buyer's loan, or paid in full at the actual closing.

While you are in your waiting period

to purchase a home, it is important to be saving for costs that will arise once you are ready to purchase a home.

Aside from the closing costs, there are other even more elusive costs involved in a house purchase. It is a wise idea to have the house you plan on purchasing inspected before you buy it. This typically costs between $200-$400. Although the peace of mind that comes from knowing that the house you are buying does not have termites is technically priceless, this is still an out of pocket expense that is added on to all of the other expenses. You may also be asked to pay for an appraisal outside of closing, which ends up being another $400. It is nice to know the value of your future home, and this is a great way to tell if you are getting a good deal on the purchase, but this necessary expense is an expense nonetheless.

Depending on the purchase agreement, it may be left up to the buyer to pay for things like repairs that need to be made in the house. Sometimes there are warranties that cover needed repairs, and sometimes the seller agrees to pay for certain things that need to be done before they move out, but if you are purchasing a house that was a foreclosure, chances are, you are buying it "as is" which means all of these extra little expenses fall on you, the buyer. This can include things like replacing carpet, or painting walls. The same can go for replacing any appliances that were not included in the package. All of these things can add up really fast. It is sometimes possible to work some or all of these things into a purchase agreement, but if you don't build the costs into your home loan, or convince the sellers to pay for them, you will be stuck with the bill.

Once all of the major expenses are out of the way, there are other expenses associated with actually moving into a new house that you want to be prepared for. Did the windows come with any window treatments? If not, you will be running to the hardware store for blinds, shades, or curtains soon. Chances are that not every light bulb in the house works, and you will want to replace them as soon as possible. Don't forget to buy cleaning supplies to thoroughly clean cupboards, floors, toilets, and showers when you move in. Remember that there are also usually installation fees for cable, high speed Internet, and phone services. All of these things add up even faster than you might think. So, welcome to the exciting experience of buying a house. It will most likely be filled with joy, stress, and lots of little expenses that are easier to take if you are prepared for them ahead of time.

Choosing your house wisely & being prepared is partnered with choosing your mortgage wisely. We are committed to your success and lifelong financial freedom. As Your Mortgage Experts, we continue to strive to raise the bar in providing excellent services to our clients and believe in sharing our knowledge to benefit all. Please feel free to pass this information along to family, friends, and colleagues.


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