Buying a home costs more than just what you put down on the home and the monthly mortgage payment. In fact, there are many hidden costs that lie in wait for unsuspecting homeowners. These hidden costs appear out of nowhere and most new homeowners don’t plan on paying them. That’s why it’s important for real estate agents to educate their clients on the exact costs of a buying a home! There are ways to combat these hidden expenses, including purchasing the best home warranty for their homes and teaching them about the real estate process. That’s why Landmark, the best home warranty (in our humble opinion), has detailed out all of the costs that a new homeowner faces when purchasing a new house. That way, as a real estate agent you can send them this link and let them learn what to expect!
Let’s start with the costs that most new homeowners expect: the down payment. On a conventional loan, the down payment of a home is around 20% of the home’s selling price. However, the mortgage lender usually determines this fee.
Earnest Money Deposit
Along with this down payment on the home, most lenders require a money deposit. This shows the seller that the buyer is serious about wanting the purchase the property. If the offer falls through the buyer may not be able to get their deposit back. However, during the closing period, this money is merged with the down payment. It is around 1-3% of the offer price.
Most lenders require a certain percentage of savings after paying a down payment on a home. This is to ensure the individuals can pay the mortgage and hopefully pay for any repairs that crop up in the new home, although homes with the best home warranty will be covered for repairs on worn systems and appliances.
Appraisal fees pay a surveyor to look at the home and determine the value of the property. This appraisal is used to determine how much a lender will provide for a mortgage and how much an individual should offer on a home. According to US News and BankRate this fee is around $400.
A buyer should (and is sometimes required to) have a home inspected before they purchase the home. These inspections ensure that the home’s foundation, structure, systems and appliances are in working condition, and if they’re not, what needs to be done. The best home warranty companies may also use this inspection to ensure proper coverage. According to the U.S> Department of Housing and Urban Development, this inspection can cost between $300 and $500.
Buyer’s Agent Fees
Part of your closing costs will be paying a percentage of the home sale to your buyer’s agent for their commission. Some states require an attorney present for closing and the buyer also covers those fees. This is usually 2 to 3% of the home’s sale price.
Credit Report Fee
When your lender checked your credit score, they had to pay, and the buyer covers that cost. This cost is around $12.
Many homeowners are surprised that they’re required to pay property taxes upfront, usually to pay the seller back from the property taxes they’ve already paid. Property tax cost is determined by how much money your property is worth and the state’s tax laws. A tax service company will generally verify that the taxes have already been paid. This is generally $75.
Although most homeowners expect added utilities, they may not understand the costs associated with setting up all of the utilities initially. This can cost several hundred dollars.
Government Recording Charges
Some states require fees to record and file the deed, mortgage and loan documentation that shows the new homeowners own the home.
Buyers will pay for title services, like surveying of the property (to ensure that the deed is correct with how much land the buyer to purchasing), and title insurance.
Most lenders will require homeowners insurance on the home that they are financing. This will depend on the homeowner’s insurance company the homeowner chooses. (Remember, even the best insurance doesn’t include the best home warranty coverage.) On average, insurance costs $952.
Moving itself can be expensive. Make sure to include the costs of the moving truck rental, gas, boxes and manpower in the home costs. Some estimate that moving costs can be anywhere between $1,800 to $2,400.
Repairs and Maintenance (reduced with the best home warranty!)
The buyer foots home repairs and maintenance after the closing has occurred on a home. Luckily, if a home came with the best home warranty, these repairs and replacements can be covered if the system or appliance that failed was well maintained. The best home warranty can reduce the repairs and maintenance fees since most of the repairs and replacements cost a flat rate $60 service call fee. On average, homeowners pay 1 to 4% of a home’s cost on home repairs, but that cost can be reduced with the best home warranty.
Homeowner’s Association Fees
Some homes are a part of a homeowner’s association, which costs a certain fee per year. According to Investopedia, these fees can be between $200 and $400.
As you can see, there are many more costs than most new homeowners expect. If you think we’ve forgotten a cost, let us know in the comments below! Remember, you can save money on repairs and replacements with the best home warranty. The best home warranty provides coverage on a home’s main systems and appliances. If a homeowner has one of these fail from normal wear and tear, they call the best home warranty company and they will get the problem repaired for a flat rate fee of $60. For more information on what we consider is the best home warranty, go to our main page here.