Hidden Home Buying Costs And How To Plan Ahead

Many first time buyers looking at houses for sale in Nanaimo BC are surprised to learn that a mortgage payment is usually cheaper than paying rent. If that’s true, why doesn’t everybody in Nanaimo buy a home instead of rent? The fact is that there’s more to owning a home than just paying the mortgage principle and interest every month. Here are some hidden home buying costs to expect before and after you buy your home.

Home buying costs before you buy

Many home buyers are surprised by the seemingly endless expenses to owning a home. While homeownership is the best financial decision most people make, it’s important to not get caught off guard with hidden expenses.

Here are some common home buying costs to know about before you buy:

• Loan origination fee varies based on your loan amount and the specific lender your work with.
• Insurance fees including title insurance, homeowner’s insurance, and flood insurance.
• Closing costs encompass all the fees and costs of buying your home

Always compare the fees on the initial good faith estimate you receive to the final settlement statement, because every now and then extra fees appear or are bigger than expected.

Extra fees that can really add up

• Professional home inspection (sometimes you’ll need several special inspections).
• Appraisal fee so you and the lender know your home is worth what you’re paying for it.
• Application fees for your loan (be sure to compare the good faith fees you were quoted to the actual fees on the final settlement statement).
• Title services like notary and government filing fees.
• Lenderfees.
• Survey costs to confirm the dimensions and size of your lot.
• One-time fees for private mortgage insurance (in addition to an additional monthly payment).
• Tax service to ensure that property taxes are up to date and properly credited.
• Moving costs for packing material, boxes, and movers or truck rental if you’re doing it yourself.

If you’re a buyer looking for houses for sale in Nanaimo BC, one fee that you don’t have to worry about is the real estate agent fee. That’s because customarily the seller pays a commission that’s evenly split between the seller’s and buyer’s agent.

Hidden costs once you own your home

When you’re putting together your budget to decide how much house you can afford don’t forget to factor in these hidden costs than many first time buyers overlook:

1. Property taxes
2. Homeowners insurance
3. Private mortgage insurance
4. Term life insurance to pay off the mortgage in the event of a death
5. Routine preventative maintenance
6. Emergency maintenance and repairs
7. Landscaping, weekly upkeep and winter snow removal
8. Association dues and special assessments

Budgeting tips for buying a new home

Before you move into your new home it’s important to plan ahead. That’s because you want to own your home and not have your new home own you.

Here are some of the most important things to budget for when buying a new home:

Ongoing taxes and insurance

When you’re shopping around for a mortgage always ask your lender what your total monthly payment will be with principal, interest, taxes, and insurance.

Set up a fund for maintenance and repair

Every home is different so there’s no one-size-fits-all answer to saving for maintenance and repairs.

Many financial planners suggest budgeting around 2% of your home’s value for annual repairs. So, if your original purchase price was $300,000 plan on putting aside around $6,000 each year for things that need to be fixed.

Utility bills will be higher

If you’re buying your first home, don’t be surprised if your utility bills are nearly double what you had when you were renting. Of course, your lifestyle has a big effect on how high or low your utility bills are.

For example, a working couple with no kids will spend less than a family with a stay-at-home parent. Ask your real estate agent to get copies of the seller’s water, gas, and electric bills if you’re buying a resale home in Nanaimo.