You have officially gone through the difficult part of buying your first house. You have your finances in order, been pre-qualified and have probably even started working with a realtor or started looking online for the perfect house within your budget. But before you put your offer in on a home there are some hidden costs associated with buying your first house. Below are some of the hidden costs I found while looking for a home. Know that these can be different regionally or based on the price of the home.
Earnest Money
Once an offer on a home has been accepted by the seller you will be expected to put some money down as a way of showing good faith. This will also put you into escrow and will take the house off the market. Most the time earnest money will be 1-3 percent of the cost of the home, but can be increased to strengthen an offer. The seller will typically want this wired to them or in the form of a cashier’s check. Tip: If your money is in a bigger bank make sure you go right away to have the money wired. I didn’t realize that the banks have times they put these through and they require a manager’s approval. This required me to get a cashier’s check and have a courier pick it up and deliver. Note: This money can not be returned if you change your mind. It will only be returned if something is drastically wrong with the home when the home inspector visits.
Home Inspection
After you put an offer in you will want to get a home inspection so you can make sure the house structure, appliances, roof and everything else is good on the house. The average cost for a home inspection is $315 but could cost more if the house is over 2,000 sq ft and a little less if the home is under 1,000 sq ft. I assumed the inspection went into the cost of the loan or closing cost, but I was wrong.
Appraisal
In some cases the seller pays for the appraisal at closing. In my case, it was my responsibility. The appraisal will let the mortgage company or lender know that the house will be worth the loan. This was also a bit of a surprise to me as I thought this went into closing and it was not a small cost. My appraisal cost me $475, which was more costly than I would have thought.
Home Buying Course
Based on the federal loan I was taking I had to take a class on home buying. It was very helpful and made the process easier. However, it cost $100. Another cost that I was not expecting.
Pest Inspection
I also needed to have a termite inspection to make sure the house was not at risk from termites. This cost $40.
Closing Costs
Based on the type of loan you are getting these costs can be quite different. Sometimes you can get money back. Best case scenario is when you have the seller pay some or all of the closing costs. You can see all costs of closing in the closing disclosure forms that come at least three business days before close. I was uncomfortable waiting for that as I am a planner and had several conversations with my loan officer beforehand to ensure I knew what was expected.
Moving Costs
I would suggest using this moving calculator to determine how many moving boxes and other supplies you may need. I also would recommend using movers to move the heavy items. This saved me hours on moving day!
Household Items
This cost is controllable to a degree. I needed a washer, dryer and fridge when I moved in. I chose to also buy a new couch and bed to make my new home as comfortable as possible!
These hidden costs can add up when you are buying a home. I have to admit that I walked through the process blindly for the most part. This was of my own choosing because I had a real fear of taking this step even though I knew it was best for me. I am hoping this information helps through the house-buying journey. If I had to do it again, I would want to know in advance about some of these costs that sneak up so I could be prepared.
Did I miss any hidden costs? What was the most surprising cost you had when buying a house? Share in the comments!
