Owning real estate property is the most important financial decision of life. While buying a house or apartment, the first time, buyers should know all about the actual price of the home and the hidden costs they have to pay.
There are numerous costs attached to buying a new house, and it is essential to know all of them. Sometimes these costs are paid last and then exceed way beyond the budget. The actual price of “house for sale“ is higher than displayed on the final price tag. With the rapid inflation rate increase, construction price land acquisition rates, and relevant fees have also increased.
Here we have gathered a list of hidden costs of buying a house that people usually neglect, affecting the house’s overall price. Knowing all about these features can help add them to the saving budget and negotiate at the right time. So let’s get started:
Property Taxes:
Property taxes are due to be paid on every piece of real estate. Usually, the property taxes are scheduled quarterly, and it is essential to pay them regularly. Property taxes are mainly used for the maintenance and betterment of the area.
Tax money is used for garbage collection, road maintenance, fire protection, security provision, etc. The government sets the amount of property tax, and it is not negotiable. However, the amount is minimal and easily bearable. For instance, in the US it is 3% approx, and in the UK it differs from 2 to 3%.
Home Insurance Cost:
An insured house is considered a safe house, and buying without insurance is deemed to be risky worldwide. Home insurance protects against weather extreme damages like heavy rains and natural disasters. While insuring your house, add items like windows, doors, electric appliances, and carpets. Negotiation in home insurance has a minimal scope; however, it does not cost heavily in your pocket.
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Closing Costs:
Among many other costs, closing costs are the major chunk buyers have to pay on closing house deals. The first-time buyers only think of a down payment as the only amount payable on closing, but it is not the entire truth. Down payment is one of many closing costs a buyer has to pay. Other durable amounts include real estate agent commission, insurance title, broker fees, interest, appraisal fee, and so on. The closing amount can vary from 4 to 7% of the house’s total price.
The good thing about closing costs is that most of these amounts are negotiable. If you have hired a reliable and competent real estate agent, they will try to save every dime on the closing cost (You can also negotiate on realtor commission).
Good Faith Money:
Good Faith money or token money is a must to pay buyers’ amount on the new house. The amount is paid to prove the intent and ability to purchase the home. Good faith money is often 1 % to 3%, and it is negotiable. The amount is commonly dependent on the credit risk of the house as per bank dedicated rates.
Repair and maintenance cost:
Some of the costs buyers have to pay as soon as they buy a house are; repair and maintenance. According to real estate experts, the older the house is, the more it will require repair and maintenance. It is good to ask for house inspection reports before buying a home. House inspection costs a lot of money, and it can increase the overall cost of the house. Therefore, try to look for houses with inspection reports or ask the seller to pay half of the price.
Cost of moving:
Once you have bought the house, it is time to shift with your family. The shifting can be costly, especially when moving from another city. Fix a budget for the moving process and only hire reliable movers’ services.
So that’s all for now! Proper planning and knowledge can save you from last time hidden costs. A reliable real estate agent can help save lots of money, and you can go through the buying process conveniently. Happy Buying!!
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