Buying a home is one of the largest financial decisions a person will make in their lives, which means when you're finally purchasing a home of your own, you want to be absolutely sure you're making the right call. Not every first-time home buyer realizes, however, that the listing price is usually far lower than what they'll end up paying for the home by the closing date, and that's without even considering later expenses. Be on the lookout for these hidden costs and fees when you're purchasing your home to make sure you're getting the best possible deal on your real estate purchase.
When your real estate agent tells you that location matters significantly, there's a good reason for it. Not all neighborhoods have the same costs associated with living in them, even if they might be incredibly similar in every other respect. U.S. homeowners paid approximately $88 billion in assessments toward community associations in 2016. Check before you fully close on your home of choice to see if there are any home ownership associations or community associations in your area; it's possible you could end up on the hook for fees and costs associated with them. If you're looking to avoid these costs, consider looking at a home nearby that isn't technically within the bounds of a more expensive neighborhood.
Believe it or not, the materials your future home is built out of could impact the cost you pay, even if you're not purchasing a new construction home. Remember that all material types have costs in some capacity, whether you're paying them directly or not. A study conducted by Architecture and Design reports that 16% of all the fossil fuel consumed annually is converted into concrete, steel, aluminum and brick building materials. On the opposite end, wood reduces its carbon footprint. Consider what you're willing to pay for when it comes to your home and its materials - more eco-friendly materials might come at a premium, but if that's a priority for you, it could be worth the cost.
Even if you think your home is in perfect, move-in ready condition, you'll likely find a few small fixes and repairs that will cost you a bit of extra cash once you've moved in and settled. For example, when you're moving in at first, you might notice that the bathroom needs a bit of work - nothing too big, just some tile repairs and a leaky faucet. These two small items can end up costing more than you might think. If you're planning on purchasing tiles, be sure to budget for extra. When laying tiles, it's important to factor in an extra 10% of materials to account for trimming and waste. Likewise, that small leak will end up costing more the longer you let it sit unaddressed. 10% of U.S. households have leaks in their plumbing that can waste up to 90 gallons of water per day. Be ready to spend some extra money once you first move in to address these smaller issues that will end up adding up.
Taxes, Taxes, Taxes
Last, but certainly not least, are the costs that you'll end up paying in property taxes for your new home. Taxes will vary by state, county, city, and individual property, so it can be hard to account for your increased taxes leading up to your home's purchase. Do what you can to research your local taxes before you commit to a purchase, or you could end up with a surprisingly large amount of money to pay later.
Real estate comes with plenty of extra hidden costs associated with it, and lots of them can be difficult to account for earlier on. However, using this list as a guideline can help you adjust your budget to avoid expensive mistakes later on in your home buying process.