Many first time homebuyers are unaware of the hidden and unexpected expenses associated with buying a home. As a result, they are ill-prepared and are often taken by surprise. If you are buying your first home, you must understand that you may have to pay for a lot more than your down payment.
So what are the unexpected expenses that may take you by surprise?
- Home inspection and appraisal fees: When buying a home, you usually need to have it inspected and appraised to make sure that you are not buying a run down property or paying more than you should. You may also have to have the home inspected for mold and other things. As the buyer, you will be required to bear the cost of these.
- Lawyer’s fees: This is one of the most expensive costs you’ll encounter when closing on your first home. Your lawyer will facilitate the transaction between you, the bank and the seller on your closing date. You can expect to pay a lawyer approximately $1500 for these services.
- Property taxes: Once you become a homeowner, you will be required to pay property taxes. The taxes are based upon the current use and the value of the land. The breakdown and amount of the taxes you will have to pay depends on your province’s regulations.
- Insurance: When buying your first home with a mortgage, or any other home for that matter, your lender will require you to purchase home insurance before closing on the loan. Don’t forget to budget for this cost monthly or annually, depending on your payment schedule.
- Moving costs: If you are moving all your possessions from your current residence to your new house, then you may have to hire a moving company. The cost of moving depends on the total weight of the goods and the distance to be moved. Moving costs can be quite high and you should be prepared for these costs well in advance of your move.
- Repair and maintenance: Maintenance is a part of living in a house, and once you move into your first home, you cannot escape it. Even if you do most of the cleaning and minor repairs yourself, you may still have to hire a contractor to do some or the more serious fixes, like plumbing repairs and HVAC system maintenance. If anything was discovered during your home inspection that should be addressed ASAP, make sure you budget for those replacements or repairs, too,
- Utility bills: If you have lived in a rental apartment in the past, you should be prepared for increased utility bills after buying your first home. The costs of water, electricity and gas are usually higher in a home than an apartment because of its larger size.
Buying your first home is an exciting time in your life! Make sure you are adequately prepared for the costs of purchasing a home by starting to budget for your household expenses well in advance. If you have any questions about budgeting towards a goal or for more tips on how to save up for the expenses that come with buying a home, contact Credit Counselling Services of Atlantic Canada today.