The 4 Costs To Know As A First Time Homebuyer
Even the most informed first-time home buyers usually aren’t aware of all the costs associated with purchasing a home. Some less-prominent costs are often overlooked, which can really add up in the end. Below are 4 costs to consider when purchasing a home. Know what you’re getting into!
1. Closing Costs
You’ve finally closed the deal to buying your first home! With this, you add one major item into your portfolio of assets you own. We don’t mean to lessen your excitement by bringing up the closing costs, but it is something you should consider right after your offer on the home has just been accepted.
To be completely honest, the best time for considering closing costs is before any application for pre-approval or offers are even made. Potential closing costs can include the following:
- Land Transfer taxes, Property tax, Provincial taxes
- Legal and notary fees
- Inspection and Appraisal fees
Generally, we recommend home buyers to set aside 1.5% of the purchase price to cover for those above costs. However, this cost can be more accurately understood by consulting your realtor or mortgage broker. They will be able to tell you exactly how much you should set aside for your initial closing costs.
2. Utility Bills
It may surprise you how much more water, heat, and energy you consume living by in a house if you’ve been used to living in smaller spaces such as condos or apartments. It’s important to consider these costs when moving into your new home as the last thing you’ll want is a surprise energy bill!
Even if you’ve rented in houses previously, it’s important to know that the costs may differ between renting and owning a house. Usually landlords are responsible for covering a portion of utility bills when renting out, which means the real cost can be higher than you’re used to! Ask a friend or family member who owns a home what the realistic cost of utility bills is.
3. Home Renovations
Unless you’ve just bought a brand-new home, there will be renovations and updates needing to be done to the property no doubt. These may not be required right as you move int, but sometimes the unexpected can happen spontaneously and it’s better to have money set aside than to be caught off-guard. After your home has been inspected, consider making a prioritized list updates that will need to be done in the future and set money aside each month to prepare for it.
4. Ongoing Maintenance
All homes require regular maintenance regardless how old the house is. Whether you want to or not, there are always things that need to be updated around the house. A few common home maintenance items include:
- Gutter cleaning
- Roof repair/maintenance
- Drywall repair
- Furnace cleaning
- HVAC and Duct cleaning
- General plumbing and electrical fixes
The amount budgeted for maintenances largely depends on the age of your home, square footage, climate in your region, and overall condition of your home. Budget accordingly!
In closing, it’s crucial to consider all surrounding costs before purchasing a home. Having money set aside for spontaneous events will help make your home buying experience a lot merrier. It’ll help give you peace of mind in the long run and allow you to actually enjoy your new home!