“What are some of the additional costs I’ll need to prepare for when I buy my first home?”
This is one of the most frequently asked questions among first-time homebuyers, and for a good reason! Besides the most obvious expense, your down payment, there are actually a number of upfront costs you need to prepare for when buying a home.
Expenses You’ll Need To Have Room For In Your Budget—Besides Your Down Payment, Of Course!
1. Home inspection
Most mortgage lenders will require a home inspection, but it’s also a good idea to include a contingency in your offer allowing you to back out of the deal if an inspector determines the home requires more work than you’re willing to take on. Generally speaking, a home inspector will thoroughly look over the property, keeping an eye out for potential safety issues the average person may not be able to identify.
Average rates for home inspections usually start at around $300 (depending on the size of the home), and prices will vary from one inspector to the next.
Before you can take out a mortgage, the lender will also require a formal appraisal in order to verify that the agreed-upon price for the home is reflective of the property’s true market value.
Appraisals in the Houston area generally cost somewhere between $350 and $500, but just like with inspections, prices will vary from one appraiser to the next.
3. Legal fees
You’ll want an experienced real estate attorney representing you when you close on the deal (if not sooner). Hiring a lawyer is the only way to ensure your best interests are represented and to clear up any ambiguous language that could potentially work against you in contracts and other legally-binding documents.
Although your Realtor may be able to offer you some guidance when it comes time to enter into contract, he or she simply isn’t qualified to provide legal advice if you have questions.
Of course, fees will vary depending on which firm you work with and how much help you need, but investing in a reputable lawyer is an absolute must when buying real estate.
4. Homeowner’s insurance
If you’re buying a home in the Houston area, you’ll likely be required to purchase flood insurance, in addition to your homeowner’s policy.
There are a number of different factors that can affect how much you’ll pay, so keep that in mind and be sure to get quotes from multiple providers before choosing a policy.
5. Additional Closing Costs
Closing costs will vary depending on your unique situation, as no two real estate transactions are the same. That said, HAR.com features a comprehensive list of common closing costs I strongly encourage you to take a look at if you’d like to learn more about the types of fees you may encounter when purchasing your first home.
6. Expect the unexpected
After you’ve figured out what your budget looks like, make sure you still have leftover savings to pay for surprise expenses that may arise after you move in. You just never know when you might find yourself dealing with a minor emergency—like a plumbing leak or a broken appliance—that could cost hundreds, if not thousands, of dollars’ worth of damage.
Remember, you can never be too prepared!
Are You Planning Your First Home Purchase?
Please feel free to download a copy of my buyers’ guide for more helpful tips about what to expect from your first home purchase. And if you’re interested in looking at homes in the Tanglewood, Memorial, Uptown, or Galleria neighborhoods, contact me today for assistance!