Here are 5 costs a homebuyer should be considering from the start

By Sharon Bartlett
Realtor at Seeto Realty

A home is considered one of the most significant purchases in a person’s lifetime. Several expenses are incurred in the process. They include;

  1. Stamp duty and property taxes

The buyer must pay these taxes and vary depending on the state. A house located in the city or the suburbs is also a reason for price variation. Typically a stamp tax is 4%-7% of the total cost of the house. It authenticates the sale agreement and evidence that a home has been sold or bought. The buyer should also consider other taxes that are paid annually and increase after a while. As first-time buyers intend to get out of rental houses due increase in rent every year, they should also be aware of these taxes to avoid being surprised after buying a home. Property  taxes are crucial and should never be overlooked.

When one buys a house under construction, the buyer must pay good and service taxes. It is 1% depending on the house’s location and size.

Registration fees are paid for transfer of ownership from seller to buyer and records updated properly. It usually is around 1% of the total cost.

  1. Maintenace costs

Buying an older home is cheaper, but the buyer should take caution in unforeseen costs due to numerous repairs done on the house. People not familiar with older homes are advised to use contractors.

Maintenance for older homes is more expensive than for newly built homes. There are cases where the maintenance cost can be very high depending on the condition of a house, but usually, maintenance costs are 1% annually. The location and size of the house determine the cost of maintenance also. These charges generally cater to building security, lift heads, water, and electric bills. In case of advance maintenance, the builder collects the money in advance  a year or two prior.

  1. Parking charges

Buying a condo at a times requires parking fees that are paid either once or annually. The cost defers with the builder. There are townhouses where one is given space for one vehicle and pays for the other areas in case he has more than one. There are instances where a buyer must buy a garage if he wants one within the complex for both the vehicles and extra items one might have.

The buyer also incurs charges named Transfer of ownership memorandum paid to the local body or transfer charges paid to the association for Transfer of property ownership in case of a resale transaction.

The buyer may also incur preferential location charges for units in better places. Ammount paid  depends on the various builders and are not fixed.

  1. Home ownership association charges

Some homes are managed by HOAs.They are either paid monthly or annually and defer depending on where the property is and the services the HOA offers. It is crucial that the buyers are well aware of these costs before buying the house to determine if the price is within their budget

In a townhome with pools, escalators, playing ground, and a gym, the homeowner association fee is likely to be higher than townhouse with a gate or escalator only. The prices are not only paid in condos but also in single family homes with in a gated community. Buyers are urged to carry out careful research on the HOA.

  1. Insurances

The insurance can be either home owners insurance or mortgage insurance.

Lenders require a home ownership insurance if one acquires a  home through a loan. The insurance cover occurrences such as fire. Although they are a requirement for those with mortgages, cash buyers are also encouraged to have the insurance. It is usually paid monthly as a combination of principal, interest , taxes, and insurance, commonly referred to as PITI. In case the house is located in areas prone to floods, one is urged to take private insurance which covers the buyer in case of a flood or hurricane.

Another type of insurance is the mortgage insurance often needed if the buyer did not have the 20% deposit by the lenders. The insurance is usually paid along with mortgage payment loans such as the FHA have different types of mortgage insurance, same case to other types of loans. The expense varies with the size and location of a house being bought. The insurance, however can be canceled when the buyer pays a loan-to-value ratio of 80%

Buying a home requiress a realistic budget to cater all expenses related to the buying process. In case of trouble when budgeting, there is always an option to hire financial experts. It is necessary to plan well to avoid having too much debt in the future or being disappointed.