The asking price isn’t the only financial factor to consider when buying a home. Many buyers make the mistake of thinking that the spending stops with the down payment. We want you to purchase your next home with confidence, knowing you’ve budgeted for the unexpected. Unveil some of these “hidden costs,” so you’re not caught off guard when purchasing your next home.
“Hidden Costs”
Homeowners Insurance
Homeowners insurance provides financial protection for your home and personal belongings. It also covers liability or legal responsibility for any injuries and property damage policyholders or their families cause to other people. Although it’s not legally required, homeowners insurance is most likely going to be required by your mortgage lender. You can expect your average annual premium to be around $3,111 if you’re purchasing a home in the state of Missouri. That’s about 35% higher than the national average of $2,305.
Closing Costs
Upon closing on your new property, you will be expected to pay fees in addition to your down payment. These costs typically add up to 2-5% of your purchase price. There are a wide range of lender fees and your fees will depend upon your specific situation. You can learn more about lender fees HERE.
Most often the buyer pays for a home appraisal at some point during the purchasing process. It can be paid for at the time of the appraisal or added to the closing costs later on. The exact cost of your home appraisal will depend on your property’s value, location, and size. The average cost of a home appraisal in Missouri is anywhere from $250 to $350.
New Appliances
Have you discussed which appliances are staying and which are going? The appliances often become a point of negotiation between the buyers and sellers. Even if the sellers are leaving some appliances behind for you, you may wind up upgrading soon anyways. Factor in the costs of appliances whether you plan on purchasing them now or in the near future, so you’re not surprised by that bill.
Home Inspection and Improvements
It’s always a good idea to get a home inspected before buying it, and the buyer is usually responsible for paying for that. The average cost of a home inspection in Missouri is about $350. Once the inspection is complete, the inspector will most likely hand over a list of things that need to be fixed. Odds are, some of those things will need to be taken care of immediately while others issues won’t be so urgent. At that point, home improvements become another one of those factors that can be negotiated between the buyer and seller.
Check out our blog on How to Make a Renovation Budget.
New Furniture
Even if you plan to bring all of your furniture with you, it can be tricky to find a new home for each one of your pieces. We recommend budgeting a little extra for new furniture just in case something gets damaged along the way or things don’t fit into your new home quite right. The moving process is always full of surprises!
Now that we’ve laid it all out there, come up with a rough estimate of what you can expect to spend when the time comes to sign on the dotted line. We don’t want any of these “hidden costs” to sneak up on you. Being informed about the home buying process is the first step in having a positive home buying experience.