title
October 2017   Volume 43, Number 10      
 

1

Four Costs Homebuyers Often Forget to Factor Into Their Budgets

Out-of-pocket costs that crop up during the purchasing process or even as the new homebuyers are moving in are straining homebuyers’ budgets. Experts suggest that homebuyers budget between two and five percent of the home’s purchase price for closing costs, including appraiser, lender, and title fees.

New regulations passed in the last year require lenders to be more transparent about these fees. But closing costs only are a portion of the additional expenses that new homeowners will face.

According to a recent TD Bank survey, nearly half of homebuyers incurred more than $2,000 in unexpected charges during the homebuying process. Ten percent of homebuyers spent at least $5,000 more than they expected to.

“Most people just look at the sticker price of the house and the mortgage payment,” says Svenja Gudell, chief economist at the housing site Zillow. “But there are a lot of additional costs that can shock first-time homebuyers.”

Here are a few of the costs that homebuyers often do not budget for:

  1. The inspection – Once an offer has been made on a property, a homebuyer usually needs to pay a home inspector to inspect the home. However, if the home inspector finds any potential problems, a specialist may also need to perform an assessment.
  2. Taxes and mortgage payments – Some homebuyers are surprised to learn their lenders require them to pay a year’s taxes and mortgage upfront at closing. Additionally, if the seller prepaid any homeowner’s association fees, the buyer is responsible for paying the prorated amount for the rest of the year or quarter.
    “Once you’re done with all the fees and the deposits for reserves, you may end up bringing many more thousands of dollars than you thought to the closing,” says Keith Gumbinger, vice president of HSH.com.
  3. The move – Moving costs vary considerably depending on where the homebuyer lives, the distance of the move, and the amount of stuff that needs to be hauled. In general, homebuyers should expect to pay at least a few thousand for professional movers.
  4. Immediate costs – Changing the locks, setup fees for utilities, and unplanned maintenance costs are just a few of the expenses that can surprise new homeowners within the first few months of owning a home.

“Set up an emergency savings account with at least six months of expenses that you can tap if your roof springs a leak or the heater suddenly stops working. That way you won’t have to turn to credit cards to cover the unexpected, and you can spend some time enjoying your experience as a new homeowner, rather than worrying about how you’re going to pay for it,” says Beth Braverman, freelance journalist for CNNMoney.

[return to top]

 

 

 

 

In this issue:

Commercial Real Estate Becoming More Vulnerable to Cyberattack

8 States With the Largest Housing Bubbles

20 ZIP Codes with the Highest Real Estate Returns

Banks Tightening Lending Standards for Commercial Real Estate in Q2

Facebook Launches Dynamic Ads for Real Estate

Nextdoor App Rolls Out Real Estate Listings

Robot Real Estate Agents to Sell Homes

U.S. Home Sales to Foreigners Surge by 49 Percent

What Real Estate Agents Need to Know About Zero-down Loans

Four Costs Homebuyers Often Forget to Factor Into Their Budgets



 


The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing and The Insurance 411 do not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher's permission. All rights reserved. ©2017 The Insurance 411. Tel. 877-762-7877. theinsurance411.com