Essentially, how much does it cost to buy a house and get settled. Below are some common hidden costs of buying a house:
- Down Payment: Ideally 20%, but not required to be this high (NOT FROM YOUR EMERGENCY FUND!!!)
- Closing Costs: Varies with bank, could be flat rate but most commonly 2-5%
- Home Inspection: Varies with property. Basic is $500 +/- $200. Extensive can be in the $1000-1500 range
- PMI: If down payment < 20%
- Real estate attorney
- Escrow (Any estimates from people? Percentage? Flat rate?)
- Origination fee on a loan: 0.5 – 2.0%
- Increasing your emergency fund: If your monthly expenses are increasing
- Property Taxes
- Home Insurance
- Flood Insurance (If located in a flood plain)
- 1-3% annual maintenance
- HOA Fees
- Utilities: Paying for utilities that were previously covered by a landlord. Differences in heating/cooling a larger space
- Utility hookup fees (if applicable)
- Trash service
Cash due at closing is a function of three things:
1) Down Payment 2) 3rd Party Costs (appraisal fee, title work, state/county fees, Life of Loan tax, Flood Determination Fee, etc) 3) Prepaid taxes and insurance for ESCROW (1 year HOI and possibly 6-8 months of taxes based on your area and the time of year you purchase).
No lender/bank has control of the 3rd party fees or Prepaids. Obviously, the down payment is up to the borrower.
The only difference between banks/lenders is price of discount points for your rate and origination. All lenders are going to be within 1/8 to a 1/4 percent difference on discount points and most will work with you on Origination charges if you show them a loan estimate from a competitor.
- Moving costs: Truck rental, boxes, pizza and beer for the people you suckered into helping you move, etc.
- Furnishing the home: Varies with size of house and current furniture
- Appliances (May or may not need to buy)
- Yard equipment: Mower, shovels, rakes, etc.
- Landscaping (Varies wildly)
- Immediate renovations/upgrades: Painting supplies AND paint if you are painting
- The little things everybody forgets: Toilet plungers, trash cans, cleaning supplies, etc.
- Tools (If applicable, varies from person to person)
- Take-out budget: Some spare cash for eating out before you unpack your kitchenware
- Broken things: Spare cash to replace items that are damaged in the move. Accidents happen.
- Replacing locks: $40/door
- Utilities : water, gas, electric, phone, cable, etc.”
Other Items Requiring an Initial Investment
Initial investments into things you may not consider until you move in. I figured I’d list these, since most of the major, more common ones are listed.
- Lawn Mower, Snow Blower, Snow Shovel, Salt, Fertilizer, Rakes, Shovels, Gardening Tools, Tools.
- Furnace filters
- Trash Service
- Anything currently covered by your rent (internet/tv/power/heat/repairs), since a house will be bigger and doesn’t share walls, AC and Heat bills will go up
- Longer driving distances since you are moving out of town.
- Major repairs, the WILL be needed, such as heater, ac, washer/dryer, fridge, oven, microwave, garbage disposal etc. etc.
- Silly, minor things, they will add up! A plunger here, a garden hose there and a bottle drain-o somewhere else. That right there alone might add up to $25 – 50, there will be tons of this kind of stuff.
What do home inspections tell you?
Inspections do not tell you about behind-the-wall problems. When I went to have something small fixed about a gas appliance install, it quickly ballooned into $2500 or so when the gas lines failed the pressure test abysmally and every joint in the house had to be tightened. The inspection also didn’t tell me the sump pumps were sending water into the sanitary sewer (illegal) instead of into the back yard. That was, at least, a cheap fix thanks to my father in law having apprenticed as a plumber before switching to electrician (and he said he wouldn’t follow his father into the trades!).