Homes are purchased on a daily basis with many of those being first homes. In fact, out of 7.3 million buyers in 2013, 40% of those purchased their first home, according to the American Housing Survey. The neighborhood may be ideal, the school system may be perfect, and the house exactly what you were looking for, but the price may not be what you expected. Besides the down payment, there are several expenses that come with purchasing a first home. Because it is your first time buying a home, you may not know about every expense that comes with the purchase of a house, but you do not want to get caught off guard. In order to find a home that you can afford, here are some hidden costs you should be wary of.
One of the best things you can do to minimize your risks of buying a bad property is to conduct a home inspection. You want to find a professional home inspector that has experience. The cost of a home inspection can vary depending on the location and size of the house, but you can typically expect to pay around $300 to $500 to have a home inspected properly. During the inspection, the inspector will look at the foundation, electrical wiring, and much more. After the inspection you will receive a list of issues that you can use to negotiate the home's price. In many cases, the seller will be required to fix these issues or lower the price of the home.
Since your home is likely to be one of the largest investments you make, you want to make sure that you insure it. You never know whether your home will be vandalized, suffer storm damage, or encounter pest damage. To protect your investment, it is crucial that you get home insurance. The amount of insurance you choose to get is up to you. Since your structure and the contents are included in the policy, you want to take an inventory of how much your assets are worth. This will help you decide how much coverage you need in case of a loss. You also want to consider liability. This covers any injury that occurs on your property. Liability is typically set at $100,000 but you can increase it.
When purchasing a home, you will typically have to incur some closing costs. These often stem from the loan, tax servicing fee, recording fee, and more. On average, buyers can expect to pay around 2% to 5% of the home's value in closing costs.The closing costs are paid at the beginning and the buyer can negotiate these costs with the seller.