These are the hidden costs of homeownership that will ruin your budget, by Kamesha Keesee.

By Kamesha Keesee

These are the hidden costs of homeownership that will ruin your budget

Right now, that the mortgage and the interest rates are down, it may be the best time to get that home you have been eyeing for. Renting is not for everybody and sooner, you will get sick of pouring hundreds of your hard-earned money into the pockets of your landlord. If you are already considering the buying option, you must have realized that mortgages tend to be a lot cheaper than paying the rents which then raises the question, why doesn’t everybody stop paying rents and use that money to pay for mortgages? Truth is, buying a home is not as easy as most agents make it sounds. As a homebuyer, you have to be prepared financially and emotionally. Additionally, there are so many facts about homebuying people still don’t know about and one of them is the hidden costs of buying a home. Therefore, this article will help you discover most of the hidden costs associated with home buying.

1. Mortgage Origination Fee

This is perhaps the first hidden cost that you will encounter as you start your journey to becoming a homebuyer. The loan origination fee is the cost that you will have to pay whenever you take out a mortgage. This is the money that your lender will require you to pay them for the services rendered in mortgage processing. As such, as you make your calculations about the cost of your mortgage, be sure to account for the loan origination fee. Although the exact amount will vary from one lender to the other, you can expect to pay anywhere between .5 percent and 1 percent of the total value of your loan.

2. Home Insurance Fees

This is one of the most overlooked costs associated with homeownership. When purchasing a home, the homebuyer signs up for several new insurance requirements.

Among the insurance contracts that you might be buying include title insurance, homeowners’ insurance, and possibly flood insurance. While these insurance costs might be inexpensive, they can still add up a present themselves as huge costs later. As such, be sure to also plan for them.

3. Closing costs

This category of costs will encompass a variety of things which include, but not limited to the appraisal costs. It is important that you stay alert to these costs as they get charged almost immediately after the seller accepts the offer.

Once you have been able to close, you are at liberty to move into your new home.

4. Taxes and other costs

Everybody hates taxes. Property taxes especially can be a huge expense to the homeowner. They are not a flat tax which means, from time to time, they will vary significantly depending on so many different factors. The value of your home will be assessed and evaluated by an assessor who specializes in real estate value allocation.

The assessor also considers the value of homes and properties that are surrounding your property and also the cost that will be incurred should a person decide to replace the house and the rate that could be charged for leasing the property based on the local rental market. All these, along with the municipality of the home are considered and will dictate the property taxes that you will be charged on your property. It is worthwhile noting that the property tax that you will first get assigned to might change as time goes. If you make a major change to your homes, such as a major renovation or backyard landscaping, your home value will likely increase and the property tax will increase along with it.

5. Real estate agent fees

Should you choose to consult and use the services of a real estate agent, you will have to pay for the services rendered. You will note that not all real estate agents will have the best intentions at heart, the more you are willing to pay for a home, the bigger the fee they might demand. For some homebuyers, using the services of a real estate agent might not be the right choice for them but it is advisable you use professional real estate services.

You can choose not to use the real estate services which will cut down the costs but only do so if you feel confident in your ability to navigate the complex real estate market. On the other hand, if you are not well known in the real estate market, it is important that you use the services of real estate. Even though you will still see this fee, it will likely be absorbed into the listing price of a home.

Sources: https://www.listenmoneymatters.com/buying-a-house-hidden-costs/ https://www.preferredpropertiestx.com/2019/10/buying-a-home-plan-for-thesehidden-costs/