Realtors and mortgage lenders should be required to hand out a pamphlet to buyers – particularly first-time homebuyers – stating all the things that they need to pay for once they close on their home. I’m not talking about doc stamps and closing costs and down payments and mortgage origination fees or any of that (though I’m always shocked when I hear people mention they were not aware of these costs prior to buying a home). I’m talking about the things that first-time buyers might not have had the forethought to consider before they go out, apply for a mortgage and move into their new home.
It’s not uncommon for a bank to tell a buyer they can afford far more than they can actually afford, and that is never a good idea. It’s easy to think that you can afford what the bank says you can because they’re the experts, right? But when you move into your new home and realize that your air conditioner requires extensive repair or replacement and you can no longer afford it because you’re spending too much on your mortgage and have nothing left over for extras, suddenly you get it. I hear stories like that all the time; you cannot always afford what you think you can. There are always additional costs that are associated with buying a home and becoming a homeowner.
Before you sign on the dotted line and begin the process of taking on a new mortgage for a new home, take into consideration that there are some fees and costs that might just surprise you once you become a homeowner. Furthermore, these are fees that are in addition to the ones you’re paying to even get your mortgage and then close on your new house.
Homeowner Association Fees
You should know before you sign any paperwork if there are homeowner association fees due monthly or annually. Your realtor should mention this when you are looking at homes in neighborhoods that require them. We pay HOA fees in our neighborhood every January; and we were made aware of them before we even looked at this house and before we even went through the front doors.
Sometimes they are very inexpensive, other times they are significantly more expensive. Do yourself a favor and find out before you sign the paperwork. You might be able to afford a $2,000 per month mortgage on this house, but can you afford that if your HOA fees are another $500 per month?
When you buy a home, you have to care for it. If you cannot care for it, you have to pay someone else to care for it. Do you have a lawn mower to keep your new half-acre lot nice and tidy? If not, you’ll have to buy one. If you don’t want to do it yourself, you have to budget to pay someone else to do it for you. This is just a small example of the many little things that require maintenance. Others might include drain cleaning, pest control, pool cleaning services and many more.
House Repairs and Upgrades
Anything can happen to a house at any time. Do you have the cash to meet your homeowner’s insurance deductible on hand? Do you have cash to repair something when it breaks, such as furnace repair? Do you have the money on hand to afford a new dishwasher when yours decides to stop working? Or to put a fridge in the house since no one else bothered to put one in for you? You may also need to set aside a budget for Drainfield Restoration services if your home has a septic system.
If you’re a first-time homeowner, you might not think of this. It is something difficult to imagine people not thinking of, but it does happen. Additionally, if you are buying a home significantly larger than any you’ve ever owned before, these fees will go up and add to your budget.
I will never forget when I saw a Facebook post by the younger sibling of a lifelong friend of mine who just bought her first home. She was shocked that she had to buy groceries. She never considered this since she’d either always eaten out or her parent cooked for her. She was horrified that she had to go out and buy not only things to eat right now, but staples for her home that you have to have on hand for the long haul. She didn’t add it into her budget and she was freaking out. It’s food; but it’s not always common sense, apparently.
Do you have furniture? Do you have enough furniture? Do you plan on living in an empty home? Décor, furniture and things you need in your home really do add up. For example, a coffee maker, a toaster, dishes, cups, and things of that nature suddenly take on a life of their own when you realize you need them yourself.
These might not sound like much, but they are big additions to any new homeowner’s life when you do not take the time or make the effort to consider them prior to making any new home purchase. Take a moment to think of these things and to add them to your budget.
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