Purchasing a home is among the best ways you can build wealth over time, but there are a lot of expenditures that come into play that extend far beyond a home’s listed price. While a listed amount may give you a general idea of what your mortgage payment might look like, there are many additional expenses associated with buying a house that many of today’s homebuyers are unaware of. These may include:
Home inspection fees
You may feel tempted to forgo the home inspection in favor of putting a little more money toward your down payment, but this is unwise. The home inspection gives you an opportunity to identify major structural issues with the home that could cost you considerable money down the line, be they roof issues or foundation problems. You may be able to get the seller to fix any problems turned up by the home inspection prior to your purchase, or you may be able to pay less for the home based on what the inspection turns up.
Mortgage insurance
If you are securing your home loan through the Federal Housing Administration, you will likely need to purchase mortgage insurance, unless you can put down 20 percent of the list price outright. The amount you pay for mortgage insurance fluctuates based on several factors, but you can expect to pay several hundred dollars per month, give or take.
Home appraisal fees
When purchasing a home, a home appraisal is typically performed. While the home inspection is intended to help identify problems with the home, the home appraisal is meant to give the buyer and seller an idea of the home’s value once factors after considering such factors as the neighborhood, the cost of nearby homes and similar criteria. Home appraisal fees vary, but you may expect to pay, on average, somewhere between $300 – $400.
Homeowner’s association dues
When determining how much you can afford per month for your new home, find out if you are going to be responsible for homeowner’s association fees. These fees are generally assessed within covenant-controlled communities, or in those that require private paving, fence painting and so on. Again, these fees vary broadly from one community to the next, so it is critical that you find out what, if any, homeowner’s association fees you will be expected to pay on a monthly or yearly basis.
These are just a few of the often-unanticipated fees that tend to coincide with purchasing a home. For a more thorough overview of associated expenses, you may find it helpful to consult an attorney.