subject: 5 Expenses Every First Time Home Buyer Should Know [print this page] First time home buyers have many unexpected expenses. Research the costs of owning a home. Talk to realtor's. Talk to insurance companies Orange County. Learn as much as you can and plan for the unexpected. Do not be afraid to ask questions. Be aware of the following expenses.
1. Home inspection. Do not think you can skip this expense. A quality home inspection costs about $300 and is worth its weight in gold. An inspector can uncover important, unseen issues like structural or mechanical problems. Other minor issues will come up such as goofy light switches, or an older hot water tank. Consider those as a guide to understanding general home maintenance issues that need to be addressed.
2. Earnest money deposit. An E.M.D is traditionally 3% of the price of the home. Be prepared to write the check when you want to make an offer. Your agent will give the listing agent a copy of this check and a pre-approval letter from your bank to prove that you are serious and that you can afford the home. Please realize that even if you have a zero down mortgage, you will still have to come up with money for an E.M.D out of pocket.
3. Homeowners. When you go to your closing for your new home, you will need to provide a receipt for one year of homeowners insurance. Call several insurance companies Orange County to get a rough estimate on the cost of a policy in your specific area.
4. Tax Pro-ration. This is just a fancy way of saying that the property taxes for the current year are split between the buyer and the seller. In fact, the seller has usually paid for them in advance so you will see a charge on your half of the HUD (the main closing paperwork) and a credit on the sellers half. This charge does not come out of your pocket but many first time home buyers are surprised at the charges.
5. Moving. When saving and budgeting, do not forget the expense of moving. Even if you can talk several family members and college buddies into helping out for free, they will expect to be fed at the end of the day and, maybe, even be reimbursed for their gas. There is also the additional expense of a rental truck and boxes, which can add to your bottom line. Budget a bare minimum of a couple hundred dollars for the big moving day. If you move cross-country, the costs can easily exceed several thousand.
Buying your first home is an experience but it does not need to include unexpected expenses. If you plan, budget, and save for the above items, you can avoid many surprises along the way.
