Buying your first house can be an exhilarating experience. The feeling of finally owning a place to call your own home is a milestone in anybody’s life. While first time homebuyers are understandably excited at the prospect of having their own place, they can often come up against some nasty surprises in the process. Buying a house, unfortunately, takes a bit more than just placing your name on the deed. While a particular house may look like a bargain, if you don’t take other factors into account, such as insurance, utilities, and closing fees, you could be in for a shock later on. To make sure your first home is everything you dreamed it could be, we’ll look at the top three things that often catch new homebuyers unawares, and what you can do to make sure you are well prepared to handle these extra costs.
Home insurance is mandatory for everybody, and that alone can set you back at least a few hundred dollars. What many new homeowners are unaware of, however, is that home insurance is rarely enough. Your home insurance will only cover the actual building structure of your home along with some permanent fixtures (the kitchen sink, bathtub, etc.). If tragedy strikes, such as a fire or flood, you could lose all of your possessions and your home insurance would cover none of it. While contents insurance is not mandatory, it is highly recommended, as losing the contents of your home, whether through flood, fire, or theft, could cost you a lot more than contents insurance would.
If this is your first family home, and you have previously resided only in small properties or apartments, then the cost of utilities will come as quite a shock. Expect to pay into the hundreds of dollars, although your specific bill will vary depending on both the size of your property and your own personal energy usage. Also, keep in mind that if you move into your home during the summer months (as many new homeowners do) expect to pay even higher utility bills. Summer months tend to cost a lot more than the winter months, so budget accordingly. If you are looking to save on your utility bills, there are sites that can help you out,
Closing fees are what really catch many new homeowners off guard. When you see the advertised price of a property, you might think that that is what you will finally end up paying for that property. Sadly, you’re wrong. Closing fees are the costs associated with a property beyond the asking price, and they’re largely unavoidable. These fees can include appraisal fees, property taxes, title searches, surveys, deed-recording fees, credit report charges, discount points, loan origination fees, and more. Because these fees are hard to avoid, it is best to make sure you are prepared to pay for them before you sign off on that mortgage.
While you shouldn’t be scared off of purchasing your first home based on the above information, it is always important, when looking at buying property, to be prepared. That way, you can rest assured that your new home will be everything you want it to be, and it won’t come with any unwanted surprises.
Peter Leveson appraises houses for insurance companies. His articles mainly appear on homeowner blogs.