It is no secret that buying a house is an expensive feat. What may be a secret to some is that the price of the home you buy isn’t the only one about to hit your wallet hard. It is important to understand the hidden costs of buying a home so that you can budget accordingly to prevent becoming house-poor and brace your wallet for the many expenses of buying and owning a home.
Continue to read to find out the 13 hidden costs of buying a home in Palm Beach Gardens, FL.
Hidden Home Buying Costs
When you are searching for the perfect home in Palm Beach Gardens, FL, it is fair if your main point of focus is the home prices. However, that isn’t the only expense you will need to save for. Before you say yes to your dream home, there are other costs to consider when buying a house.
1. Home Appraisal
If you need a mortgage loan to finance the purchase of your house, the lender will require you to pay for a home appraisal as well. Even if you plan to pay cash, it is a good idea to book an appraisal to have a current assessment of the home’s market value. Appraisers look at a home’s condition to determine if there are safety hazards or structural issues to assess the value of the home. Home appraisals will come out of pocket, and typically cost between $300 to $400.
2. Home Inspection
A home inspection is another upfront cost to tackle, it can save you a lot more money in the long run. Home inspections range between $300 to $500, which will reveal if there are any major issues or concerns with the home. If the inspection should reveal problems with the home, you can always negotiate with the seller to have them fix the issues or lower their sale price. You might also be inclined to decide to walk away from the sale if the issue isn’t one you want to deal with.
3. Earnest Money
When you purchase a home, you will pay what is called “earnest money” up front after a seller approves your offer and before you jump through all the hoops required to buy a home. The earnest money deposit shows the seller that you are serious about your plans to purchase their property. Once the transaction goes through, you will get your earnest money back. If you choose to back out of the deal, you might get back your earnest money. The contract will outline the rules about your deposit, but earnest money is usually 1% to 3% of the home’s sales price.
4. Property Taxes
While the property tax is an ongoing expense you will need to budget for as a homeowner, you will also need to pay for six months of those taxes before you can close on the sale of your home.
5. Escrow Account
You will typically pay for your property taxes and other expenses like insurance in the form of an escrow account upfront. Your lender may require you to leave extra money in your escrow account to cover miscellaneous expenses.
6. School Taxes
Depending on where you choose to buy a home, you might need to pay school taxes to help finance the local schools. This is one of the major hidden costs of buying a new build home as many newer communities often charge more taxes to cover the building of newer schools in the area to service the community. Your real estate agent will help you determine if a house comes with school taxes attached to it.
7. Closing Costs
When the day comes to close on your new home, you will need to pay for necessary closing costs, with some costs previously noted. If you have not paid them by the time of closing, you will pay them at that point. Closing costs can include the following:
- Appraisal fees
- Closing or escrow fees paid to the escrow agent
- Homeowners insurance for the first year
- Loan origination fees
- Mortgage points
- Property taxes for the first six months
- Title search and insurance
8. Moving Costs
If you think it’s time to close your wallet, pause a moment. Once you close on a home, it is time to move. This exciting moment is also a pricey one, especially if you need to hire a moving company. Leave a little room in your budget for packing supplies, time off work, and hiring a mover or renting a moving truck.
Ongoing, and Overlooked, Costs of Homeownership
Now the hidden costs are laid out when expecting during the home-buying process, it is time to create a budget to help you navigate that expensive time in your life. When your focus is primarily on the major price tag that your new home comes with, it is easy to forget about how the additional costs when buying a house add up. The costs don’t stop once you buy a home, they are just beginning.
9. Utilities
Before buying a home, you need to do the math to ensure you can afford more than just the monthly mortgage payments. If you previously lived in an apartment or a smaller home, you might face some utility shock when moving into a new place. You will likely encounter a wide variety of utility bills such as the following:
- Electricity
- Gas
- Heat
- Sewer
- Water
- Cable
- Internet
- Phone
- Trash
Where your home is located, what size your home is, and your habits will greatly affect how much you pay for utilities. For some of the listed utilities, you need to pay installation fees, which add up for new homeowners.
10. Home Maintenance & Repairs
The expenses of being a homeowner can sneak up on you when you least expect them to. Have an emergency fund set up to cover the costs of future home maintenance and other unexpected repairs so you don’t have to worry about how you will pay for them when the time comes.
11. Homeowner’s Insurance
If you have a mortgage loan, the lender will require you to buy homeowner’s insurance to protect both you and them financially. Even if you opted to pay cash for your home, it is always a good idea to take out a solid homeowner’s insurance policy to cover the costs of major repairs needs, injuries that occur on your property, and the possibility of theft.
12. Mortgage Insurance
If you aren’t able to make your downpayment of 20%, you will have to pay private mortgage insurance, also known as PMI, each month.
13. Homeowners Association Fee
Homes that are located in a planned community often come with a homeowners association fee that homeowners must pay monthly or annually to cover the costs of landscaping, community repair, and maintenance of amenities such as pools. How much your fee is will depend upon the community you choose to live in but expect to pay anywhere between $200 and $400 a month. You can always skip these fees if you buy a home in a neighborhood without an HOA.
The Bottom Line
The high costs of homeownership are often worth it in the long run, but it is always important to know what costs are coming your way so you can plan, save, and avoid unnecessary stress. Let the Palm Beach Coastal Realty team help you find your next dream home in Palm Beach Gardens, FL today!