When you're preparing to buy your first home, you are more focused on saving for your downpayment, just because that is usually the biggest obstacle that first-time home buyers face. However, many first-time buyers are unaware of smaller costs that add up during the home buying process. Here are some that your should research and prepare for before you take the leap to start house shopping.
1. Initiation or conveyance fees.
The bank/broker will often charge some sort of loan initiation fee to help offset the costs of underwriting the mortgage. Sometimes, real estate attorneys work with the lender, and attorney fees (conveyance costs) can be tied up in this charge. You can expect a conveyance cost to be as high as 2% of the loan value. Be sure to talk to your intended broker before you decide on your dream home, because these fees usually can't be wrapped up the loan itself.
2. Furnishings and appliances.
You know you'll need couches and tables, but what about window treatments, light fixtures, and other less-prominent furnishings? This is a cost that many people do not anticipate. Also, when shopping for houses, consider whether or not the appliances are staying behind and what that can mean for your bank account. If you have the advantage in the buying process (the house has not moved on the market, there haven't been any other offers, or you have a cash offer), you can request in your purchase agreement that the appliances stay.
3. Utility start-up costs.
You'll have to contact all the utility services and have them registered in your name. Usually, there is some sort of initiation fee, non-refundable deposit, or a charge for equipment (like the trash cans for trash removal). You should contact utility companies in your area and speak with neighbors with similar homes and incomes to anticipate the total utility costs for your house, including start-up fees.
4. Inspections and assessors.
You should never buy a home without getting it professionally inspected before you draw up the purchase agreement. While you might know that you need to have an inspection, you might not have been aware that the cost of the inspection usually comes out of your own pocket. You therefore need to be serious about closing on an offer and getting financing before you hire an inspector. Sometimes, the assessment by the broker also comes out of your pocket if it is not lumped into closing costs.
For more information on buying a home or looking at homes for sale, contact a real estate agent in your area.
