Whether you have already purchased a home or are just now preparing to purchase your first, it’s important to not budget only for the cost of the home itself. There are many overlooked expenses when it comes to home buying, so look out for these four potential budget busters when you are looking for your dream home.
Closing costs are the fees that you pay when the title for the property is transferred to you. Closing costs are typically anywhere from 2-5% of the value of the home. While 2% seems small, 2% of a $500,000 home is anything but small! Closing costs can include the home appraisal, attorney fees, underwriting fees, and processing fees. Keep in mind that closing costs are often negotiable, so work with your mortgage broker to see if some fees can be talked down or eliminated altogether.
If you are buying a home, the lender will often require you to prepay about six months of escrow payments for your taxes and insurance. These expenses again seem small but can add up quickly. If your yearly real estate taxes are $4,000, you will need to have $2,000 set aside for this purpose. In addition to your taxes, your homeowner’s insurance will also want about six months of advance payments set aside.
You Have a Home, You Need Things to Put in It
While the home itself carries a hefty price tag, one of the most overlooked expenses that first-time homebuyers face is the cost of furniture and décor. Apartment furniture might not cut it in your new home, so budget thousands of dollars (seriously, thousands) into furnishing your new home. Even IKEA will set you back some serious cash, so get ready or start scouring thrift stores now.
Finishing Your Home
Finishing expenses for your home are some of the most overlooked things when people purchase fixer-uppers. Forget what you think that you can get the job done for, add at least 30-50% to that figure. Many do it yourself projects end up taking a long time and costing much more than you anticipate. Mentally budget for overspending and potentially needing to hire a professional to finish the job.
A Title Company You Can Trust: Colony Title
At Colony Title, we will help you through the process of getting your property’s title and help you avoid the pitfalls of hidden costs while you buy your home. We are also well trained in identifying any and all errors in public records and helping you resolve them. We specialize in real estate title insurance in both Maryland and Washington, D.C., and we will perform an expert title search, check through all past documentation, and examine records for any fraud or forgery. For more information on how we can get you into the home of your dreams, contact us online or give us a call at (410) 884-1160. To get more updates on housing markets and how to get into your home, follow us on Facebook, Twitter, LinkedIn, and Google+.