It’s easy to get caught up in the excitement of purchasing your first home but buying a home involves a lot of factors that one needs to consider. You might be preoccupied with how you’ll decorate or live in your home over the next few years, but other important things like size, location to the cost of their monthly mortgage payment also matter.
Amidst this, one thing that most of us overlook is the extra costs associated with purchasing a property. You may anticipate certain costs when purchasing a home, such as the down payment and earnest money deposit — but there may be others. Most of the buyers underestimated the total expenses of owning a home. Here we will be talking about the common hidden costs of buying a home that a real estate agent will help you understand when buying homes for sale kootenai county ID.
Property taxes: When making a blueprint of how you are going to purchase a home, most people forget to consider this. There are many tips homeowners must know if they are buying a home for the first time. These are the taxes you pay to the county or local government where you live. Property taxes vary by state, and the amount you’ll pay is determined by the assessed value of your home. These taxes are typically paid on a monthly basis in conjunction with your mortgage payments. Property taxes are used to fund infrastructure improvements, public schools in your area, and city and state employee salaries.
If you have a mortgage on your home, your lender will most likely require you to have homeowners insurance. A homeowners insurance policy protects the structure of your home as well as your belongings in the event of a destructive event, such as a fire. It’s also critical to understand what your homeowner’s insurance does and does not cover. Floods, earthquake damage, and theft losses are frequently excluded from these policies. You can decide whether to add additional policies to your home once you understand what is and isn’t covered by your homeowner’s insurance.
Homeowner’s association fees: Homes in planned communities frequently include a homeowners association fee that homeowners must pay on a monthly or annual basis to cover the costs of landscaping, community repair, and maintenance of amenities such as pools. The amount of your fee will vary depending on your community, but expect to pay between $200 and $400 per month. If you buy a home in a neighborhood without a homeowners association, you can avoid these fees.
Earnest Money and Closing Costs: Down payments and closing costs are completely different, but most of us couldn’t differentiate. A down payment is a one-time payment made by a buyer. Closing costs include all fees associated with the purchase of a home, such as a title insurance, appraisal fees, broker fees, and interest. This fee can range from 3% to 6% of the purchase price. Earnest money, also known as “good-faith” money, is a deposit made by the buyer to show his or her intent and ability to purchase a home. These funds are typically used for closing costs or a down payment and can range from 1% to 3% of the home’s value. Earnest money may be more than you anticipate. For example, if a bank believes you to be a higher credit risk, it may require more earnest money.
While paying a mortgage is expected, the hidden costs of owning a home can hit your wallet hard. Your real estate can help you scout these associated costs and can help you differentiate the essential and non-essential costs.