Hidden Costs of Buying a Home
People love to buy homes of their dreams for living. Buying a home has many advantages as compared to renting a house. But many people cross their budget limits while buying homes and face financial hardships. This is because buying a home has many hidden costs in addition to the price paid to the home seller. If you are a first-time home buyer then please read these top 6 hidden costs of buying a home.
Many buyers don’t factor in the closing costs that greatly impact the budget of the buyer. Generally closing costs are 5 percent of the home price therefore buyer should know these additional or hidden costs of buying a home. Closing cost includes the notary fee, recording fee, title transfer fee, lawyer’s fee and taxes paid to the local development authority as a buyer.
Estate Agent’s Fee
The second hidden cost of buying a home is the fee of real estate agents. Most estate agents work on commission basis whereas some have the fixed fees. The normal commission of a realtor for home sale is 2% of the value of home; 1% from buyer and 1% from seller. Home buyers should the commission of the real estate agent while buying a home.
This is the one time cost you will pay for shifting from the rented house to your own home. The cost includes the purchase of packing materials and movers rent. The moving cost increases if you are have more stuff and shifting from a distant area. But the cost will be much affordable if you have less stuff and shifting to your own home from a nearby area.
Many people buy old homes for living. The old homes have old designs and finishes that need to be upgraded. Even in some cases people want to build additional bedroom, bathroom, store or storey. Home renovation cost depends on your new layout plan and finishes. Typically renovation cost is from 5 to 20 percent of home value. Therefore home buyers should also consider the renovation costs while buying an old home.
There are mainly three types of costs to regularly maintain a home. First one is the utility bills, second one is to maintain the property in good condition and third cost is the maintenance of the garden or backyard. According to the experts people spend approximately 1 to 4 percent of home value on maintenance every year. Therefore home buyers should factor in the maintenance costs while buying a home.
Annual Property Tax
Home owners have to pay the annual taxes to the government and the councils. First tax is the property tax that is annually paid to the government. Property tax is 1 to 5 percent of the home value depending on the size and value. Second tax is annually paid to the local council for providing the services like electricity, gas and water. Buyers should also consider the annual property taxes before buying homes.