Buying a house isn’t just a matter of paying the mortgage every month. There are all kinds of hidden costs. We’ll help you ferret them out.
Just because a mortgage payment is less than your current rent doesn’t necessarily mean buying a home would be cheaper. There are lots of costs to consider when deciding to buy a new home.
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There will be a loan origination fee when you take out a mortgage. This is what you pay the lender for doing the work involved with making the loan.
If you choose to use a real estate agent, you’ll have to pay their fee. Not all agents have your best interests at heart, the more you pay for your home, the bigger their fee. You don’t have to have an agent to buy a home.
You will be buying lots of different kinds of insurance, title insurance, home owner’s insurance, possibly additional flood insurance. None of them are break the bank expensive but they can add up.
If you are buying into a condo or co-op, you will have various fees associated with that. And if there are large improvements being made to the building, you will pay an assessment, your portion of the expense.
Closing costs will encompass a number of things including appraisal costs. Once you’ve closed, you’ll be able to move into your new place. Moving costs money. If you’re going from an apartment to a house with a yard, you’ll need things like a lawn mower, a snow shovel, and tools that you never needed before, all that Home Depot stuff.
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You’re going to need an “oh shit” fund. The water heater needs replacing? Oh shit, better have a fund for that. Snow collapsed the roof? Oh shit, gonna need a fund for that. An emergency fund just for your home is a good idea.
Property taxes can be a huge expense. Your mortgage company will also hold some money in an escrow account in case you don’t pay those taxes. So you pay the taxes and have money taken away in case you don’t pay those taxes.
Buying a home can be a good investment but make sure you understand the fine print costs involved.
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