Past the Price Tag: Home Buying Costs to Prepare For
There’s no doubt that buying a home costs a lot of money, but some homeowners forget to plan for all the expenses. The price of the home is obviously a big deal, but you also want to think about the other types of expenses you’ll have to be sure you’re not strapped for cash. Our list of additional costs can help put you on the right track.
Décor, Furniture, and Other Necessary Items
Moving into a brand-new home doesn’t necessarily mean you need to buy new furniture, but you’re probably going to need a few things. If you’re moving into a bigger home, you may need to buy a few small pieces to fill the space. You may want to make some new interior design decisions to adorn your new place. Sometimes, you need to make a few big purchases. Those moving from an apartment to a 
detached home with a yard, for instance, may need to purchase a lawn mower and snow blower for handling the outdoor maintenance. You don’t have to purchase everything at once but keep these little costs in mind.
Property Taxes and Homeowners’ Insurance
Whenever you own a home, you must pay property taxes and homeowners’ insurance. While most people know that these costs are part of the deal, calculating the true cost of your new home can sometimes be a bit shocking.
In most cases, the mortgage lender will collect 1/12 of the annual premiums for these payments as part of the monthly mortgage cost. The money goes into an escrow account, and the bank makes payments on behalf of the homeowner. These costs vary, but if you’ve been using mortgage calculators that didn’t include these payments, you may be overestimating what’s affordable.
You’ll also be required to pay these annual costs as part of your closing costs. In general, these fees could cost a few thousand dollars, depending on the size and cost of your home. The bank will be able to give you a better estimate of how much you’ll have to pay on closing day.
Utility Costs
Homeowners are responsible for all utility costs. Those who have been living in rental situations that included heat, waste disposal, or cable may be in for a surprise when they see how much these things cost. If you're moving from a small home to a much larger one, you’ll also see a big increase in costs. The good news is that brand-new homes are energy-efficient. This reduces the cost of utilities, but it’s still important to estimate how much these bills will cost so that you can buy a home that is affordable.
Closing Costs
On the day you close on your home, you’ll have a cheque ready for the closing costs. We’ve already mentioned that you’ll have to pay the annual property taxes and homeowners’ insurance premium, but there are many other expenses, including:
- Property assessments
- Legal fees
- Sales tax
- Land survey fees
In general, you can expect to pay between two and five percent of the cost of your home in closing fees. This money is in addition to your down payment, and you will not be able to use credit cards to cover the cost. It must be in the form of certified cheque, bank draft or money order.
Home Inspection Fee
When you buy a resale home, it’s important to get a home inspection done by a professional. This person will look the house over from the roof to the basement and let you know if there are any concerns. This helps the buyer make an informed decision about buying the home.
If you’re buying a brand-new home, you may not need to hire someone to inspect the home. The builder typically has to have inspections done throughout the building process so the home will pass any safety or building codes. Additionally, any problems with the home will be covered by the warranty.
However, some homeowners appreciate the added security of having an outside party do an inspection. Talk to your builder about what types of inspection your home will go through and decide whether you want to pay for an additional inspection.
Moving Costs
Once you get the keys to your new home, you’ll need to move your belongings from the old place to the new one. The cost of a professional mover varies based on how much stuff you have and the difficulty of moving the furniture. For instance, someone moving from a sixth-floor apartment will likely pay more than someone moving from a ranch-style home. A young couple will probably pay less than a large family because there will be fewer boxes to move. When getting estimates from moving companies, insist on an in-person estimate. They can’t accurately estimate the time they’ll have to put in without seeing what you have.
Being happy in your new home starts with feeling financially secure. When you choose a home that meets your needs and factor in all of these costs, you’ll feel confident in your decisions.
