Your home is the one of the most expensive assets you will ever buy or own. Buying your first house is undoubtedly a great experience. But the expense of buying a home needs to be considered first. You will face many upcoming expenditures that you never imagined. Most of the first-time home buyers know what to prepare for which is usually a down payment, but that is not all to consider. It is very important to know what you are getting into before signing the contract.
No matter how careful you are about the expenses, there will be however some unexpected costs for that you were never ready. One thing that you should understand before buying your first home is that it will have a great impact on your financial health. If you make a list of all extra costs that will come before you, then you should keep a backup even after that. Because there will be many extra expenses coming your way including house moving and repairs. Let us discuss the 7 most unexpected first-time home buyer costs.
Let us assume that you put an offer on a home and it got accepted. The next thing you want to do is the inspection. Yes, multiple inspections should run across the house to make sure it is in good condition. Before closing the deal it is important to get an inspection report. These inspections may include wood-destroying insects (termites) inspection, sewer inspection, and a general inspection. All of these repairs can add up to thousands of dollars.
Besides these inspections, you might want to see the current condition of the house. If the house requires a huge amount of money for maintenance, then you should probably pull out of the deal. Or renegotiate with the seller and come to a fair price deal, cutting the maintenance price from the house price. Many of the sellers conduct inspections and generate a report of their own. But you should run the inspections and be sure that what you are buying is safe to invest in.
Every homeowner requires insurance that can help to cover repairs, rebuilding, and personal belongings. Insurance protects you against liability claims. It can be divided into three categories that are home insurance, mortgage insurance, and supplemental insurance. Many credit institutions and the bank will require you to buy home insurance having at least a year of coverage before approving your loan request.
These insurance are enough to cover for your house. You do not need any additional insurance but if you live in an area where there are chances of flood and earth-quake, then make sure to get it. Because your normal insurance will only cover according to home insurance policies standard. Make sure to contact an agent because he will find you a perfect deal at the best rates.
Besides paying for the house and insurance, there is a property tax that is non-negotiable and disclosed on house listings so you will know the upcoming expense. The property tax is different for all the states. You will be responsible to pay 1% or 2% of your home value as property tax depending upon the state you live in.
Variation in property tax can grab a huge chunk of your money. In most cities, the tax will be based on PAV (property assessed value) together with the local tax. Once the tax is calculated it is up to you to divide it into monthly installments and pay it with your monthly mortgage payment or you can opt to pay it separately.
Escrow agents are lawyers or security company representatives that serve as independent third parties. They make sure that the deal is going smoothly and each independent party is paid. But as for the home buyer, it is an additional expense to pay for escrow agents. Usually, the escrow charges are split between seller and buyer.
After your appraisal is accepted. The current house owner will run some of the paperwork and provide you with a detailed list of closing costs. According to many surveys, these closing costs are usually about 2%-5% of your house purchase. For example, if you are buying a $5,00,000 home then be ready to spend RM10,000 to RM25,000 on your closing costs. These closing costs include lender fees, appraisal, the title of the attorney fee, and interest.
You can calculate your closing costs based on the price of your home but expect to pay several thousand on top of your other miscellaneous fees.
As this is your first-ever home purchase, you are probably used to the landlord taking care of your maintenance. Maintenance is just a call away for you. But in this case, you have to care for all the maintenance that may befall upon you. If something breaks or you like to maintain your lawn, then it will cost you.
You need to make an extra and separate budget for maintenance. In case you do not like flooring or ceiling of the house, or you want to repaint the house. These are all unexpected costs.
One of the most important people that will help you to move is the professional movers. They are professionals who have experience of moving the home daily. In DFY Movers, we provide top-tier house moving services throughout Malaysia. We take extra care of fragile types of equipment and also provide lorry rental for transporting goods. Paying the movers is an extra expenditure too. But do not worry, we provide a free quote that will fit right on your budget. Moreover, you will save your valuable time and money that you spend on unexpected damage that happens in moving on your own.
First-time home buyers have to go through a lot of things that you never imagined. There will be multiple people that will cause you problems on your way to buy your first-ever home. Besides saving the money to buy a house, you should keep at least keep 50% more money for unexpected costs. There are a lot of unexpected costs that will run by you. These costs include inspections, insurance, property taxes, maintenance fees, closing costs, escrow charges, and professional mover charges.