Plan for Unexpected Fees When Buying a New Home
So the day has finally come, you found the perfect home for you and your family. Amazing layout, quiet neighborhood, good schools, and the price is within your budget. Try and hold back the urge to pull the trigger before you get a better idea of additional, unexpected costs. Not planning for the unexpected could leave you ill-prepared for the avalanche of expenses that may be in your future.
Plan for The Unexpected
If you are buying a new home, you understand there are going to be expenses related to insurance, closing fees, etc…those are easy to plan for as those are itemized in your closing documents. However, there are other expenses you will want to try and plan for beyond the standard closing fees. Below are a few of the more common unexpected expenses that arise when purchasing a home.
- Appliances- Often times the previous owners can play a large role in additional out of pocket expenses. Some owners do not include appliances as part of the sale and will remove them prior to your closing. This unforeseen expense will set you back several thousand dollars. If the seller is taking the appliances, try and negotiate the sale price to help mitigate the out of pocket expense you will be incurring.
- Upgrades- you may be purchasing a home that needs improvements. This may include a new a/c, roof, updated kitchen or bathrooms, etc…. always try and negotiate these out of pocket expenses into the purchase agreement.
- Home Inspection Issues- we cannot stress this enough, ALWAYS hire a home inspector to look through your potential new home with a fine-tooth comb. It will cost you around $400-$600 but it is worth the investment so you can uncover issues that may have been hidden or overlooked by you. This will also provide you with the cover either to back out of a deal if there are significant issues, or the possibility to re-negotiate the price based on issues found.
At Home Comforts
Items you may not consider until you actually move in which include:
- The placement of the cable outlet. Is it located where you want to place your TV, or will you have to get the cable company to move it?
- Do you have electrical plugs where you need them to be?
- Are you moving into a larger home? Be ready to have higher monthly utility bills.
- Are you moving into a community that has HOA or CDD fees? If so, these are monthly expenses that need to be budgeted for.
Try and Plan Ahead
This is definitely easier said than done, however, you will need to do your homework. The best way to limit your financial exposure is to research, have a checklist or requirements, and plan for the unexpected.
If your shopping for homes within a specific budget, especially older homes have a contingency budget calculated based on things that you want to accomplish after closing. For example, you may want to completely remodel the kitchen. Research costs for new floors, cabinets, countertops, appliances, get estimates from contractors. This will at least give you a ballpark of what it may cost. The last thing you want to do is move in, and then find out the remodel you thought may cost $10,000 will actually cost $25,000.
Also, when deciding on a home don’t just decide on a home because it is the cheapest. Ask questions and do your homework. The home in question may be the cheapest because the plumbing, roof, HVAC, and any number of other issues may need to be replaced. These expenses may be much more expensive in the long run. Also, your insurance payments may be higher based on the age and history of the home.
Research other homes in the same area. Look at comps as well as, both insurance and property values prior to submitting an initial bid.
Know What You Can Afford
Define your budget! Know how much you plan on putting down, know how much you have for contingencies, and know exactly how much house you can afford. If you find a house at the very high end of your budget, but you know there are additional expenses that you have to plan for (i.e.: new HVAC, appliances, etc….) you may need to move on to something a little cheaper. The last thing you want to do is get yourself into a situation where you are barely scraping by because you exceeded your budget requirements.
Buying a home is your largest investment. Having a plan, being prepared, and staying disciplined can be the difference between a happy home and purchasing a money pit.
If you are looking to purchase a new home and need assistance from a seasoned Fernandina Beach Realtor call Summer House Realty today. Our agents will work with you and assist you through every step of the process. Let us help you find your dream home today, call now (904) 557-3020.