Most buyers come into the home buying process with a budget already in mind. But if they match their home price to their available budget, they may end up in hot water come closing time. That’s why it’s so important to make sure you properly prepare your clients for the hidden costs they’ll encounter on the road to homeownership. Here are a few expenses to be sure your buyers are aware of.
Closing costs — Many of the closing costs are negotiable, but it’s common for buyers to pay most of them, particularly in a seller’s market. Mortgage fees, title insurance, recording fees, and appraisal fees are some of the small numbers that will add up to be the closing costs, which can vary and depends on the purchase price.
Moving costs — Once the closing is over and the home belongs to your buyers, they’ll still have to shoulder the expenses of moving in. These numbers can vary depending on how far they’re moving and much of the moving labor they’re willing to do themselves, but they should know the answer to those questions before buying a home.
Utilities — While your buyer may be able to afford the monthly mortgage payments, it’s important that they also consider the utility costs at their new home. Depending on their previous living situation, they may not think to consider the costs that come with water, electric, trash, and other necessary monthly utilities.
HOA — If the property being considered is under the restrictions of a homeowner’s association, they could be looking at another few hundred a month in fees. Many HOAs provide services that your clients may find useful and worth the expense, but they may also want to look into what the HOA provides and make sure they feel comfortable signing on for the fees in exchange for whatever the service provides.
Property taxes — These are calculated based on the value of the property, as well as state and city regulations. This means that different properties even in the same city could come with different property taxes.
Insurance — Homeowners with a mortgage are almost always required to get homeowner’s insurance, so this is a non-negotiable expense for most buyers. The cost will depend on location and other factors, but buyers can expect their annual premium to be around a thousand dollars.
Once they have a complete understanding of the full financial picture of a home purchase, your clients may find that their budget has shifted. By getting this out of the way early, you help ensure that your buyers are looking at homes in their correct price range and will ultimately end up in a house that suits their needs and their budget.