13 Hidden Costs when Buying a Home

Costs

Home ownership is the American dream.  We save and set our sights on the perfect home in the perfect neighborhood.  Indeed, it’s a worthy goal!  But many buyers, especially first time buyers, are taken aback by the initial and ongoing investment that homeownership requires.  The price of home ownership includes so much more than just the listing price.  Getting educated about all of the unavoidable housing expenses ahead of time can lessen the stress of over extending your budget in the end.  Spending the greatest amount for which you are able to qualify is, typically, not the amount you can actually afford.  Here are 13 expenditures you’ll want to consider before outlining your budget and setting the price range for your home search.

  1. Home Inspection

The home inspection is an important part of the home buying decision-making process.  A home inspection is not mandatory, but every good agent and home buyer knows that it is essential.  A good inspector can save you money in the end, and keep you from making a big mistake.  The pricing is based upon the size of the home inspected, starting at several hundred dollars for a smaller home and increasing for larger homes.

  1. Appraisal

The appraisal, however, is mandatory.  Your lender will require the property to be valued by a certified real estate appraiser.  The value of the home determines the amount of money loaned out on the property.  The cost of the average appraisal usually ranges between $300 to $400.

  1. Escrow Account

The escrow account is sometimes difficult for first time home buyers to understand.  In a nut-shell, this account is designed to collect payments for items such as taxes and homeowner’s insurance.  The escrow account must maintain a positive balance at all times, and this adds an additional amount to your closing costs and monthly mortgage payment.

  1. Closing Costs

Closing costs can add up.  Of course, you will receive a “good faith” estimate before closing.  This should eliminate any big surprises.  Still, closing costs can sometimes outweigh the down payment (2% – 4% of the mortgage), so you have to be prepared.  Closing costs include items such as loan origination fees, discount points, underwriting fees, surveys, and title search fees.  These costs are an unavoidable part of the closing process.

  1. Homeowner’s Insurance

Homeowner’s insurance, as mentioned before, will be added in as part of your monthly mortgage payment.  However, it is important to “shop around” for the best pricing.  You will choose your insurance agency and your policy, but your premiums will be paid from your escrow account.

  1. PMI – Private Mortgage Insurance

PMI is mortgage insurance which is used with conventional loans to protect the lender if the borrower ever stops making payments on the loan.  This can add up to several hundred dollars each month, depending on the balance of your loan and rate.  Once your loan to value (LTV) ratio is paid down, PMI can be removed from your monthly expenses, but this usually takes years.

  1. HOA – Home Owner’s Association Fees

HOAs are standard among most neighborhoods these days.  These fees will not be included in your mortgage payments.  Typically, the fees are collected once a year by the association.  They can range as low as $1,000 annually to $1000+ monthly.  The HOA fees are something that you need to consider before making an offer on any particular property.

  1. Mortgage Interest

Mortgage interest, just as it sounds, is the interest rate you pay on your loan.  Negotiating the best rate, and/or paying the rate down in the beginning will greatly impact your monthly mortgage payment.

  1. Utilities

Many home buyers fail to consider the cost of utilities when preparing their monthly budget.  Electricity, water, natural gas, telephone, and trash/recycling costs can add up to thousands each month.  Be sure to calculate all of these costs before deciding on the price of the house you plan to purchase.

  1. Property Tax

Yes, the property tax will be included in your escrow account and figured into your monthly mortgage payment.  However, it is also something you must consider when looking seriously at any property.  The amount varies greatly from state to state, and is used to pay required city, county, and school taxes.

  1. Maintenance and Repairs

First home buyers are often caught off guard with regular maintenance and repairs.  Coming from a rental experience, where everything is covered by the landlord, home buyers do not realize the expense they can occur when it comes to general maintenance.  From HVAC systems and swimming pools to regular landscaping and lawn care, the dollars can add up.  Don’t forget to include these costs in your budget.

  1. Moving Expenses

Moving expenses include, not only, the cost of moving your belongings from one property to the next.  It also includes initial deposits and connection fees for home utilities and services.

  1. Furniture and Window Coverings

Purchasing a new home, usually, means purchasing more space.  Filling this new space with furniture, décor, window treatments, and other necessities can be costly.  Figure these items into your budget as well.

The more you know about the hidden costs of purchasing a new home, the better you will be able to prepare and manage a workable budget.  Home ownership is, without a doubt, a dream come true.  But, getting in “too deep,” financially speaking, can become a nightmare.   Knowing the costs associated with purchasing your home will help you make the difference!

What is Homeowner’s Insurance?

Insurance Calculator Showing Protection Of Home Life Or Car Investment

Homeowner’s insurance is something that most of us don’t spend a lot of time thinking about until we need it.  And, sometimes we find out, after it’s too late, that our coverage is lacking.  By having a good understanding of homeowner’s insurance, we can better prepare by choosing the best policy and ample coverage well in advance of disaster.

Here, we will discuss, in detail, the items that are usually covered on a standard homeowner’s insurance policy.

  1. The Structure of your Home

Repairs or rebuilding of your home is covered in case of fire, lightening, tornados, and hurricanes.  Other disasters may be listed in your policy as well.  Policies usually do not cover damages from floods and earthquakes.  Smaller structures on your property such as detached garages and sheds are usually covered also. Trees and plants are even covered, although the coverage usually does not include wind damage.  It is important that your policy includes enough coverage to replace your home in case of total loss.

  1. The Contents of your Home

Personal items in your home such as appliances, furniture, clothing, and other items are also covered in a standard policy.  You can choose the amount of coverage you wish to have on your personal belongings.  These items are covered by your homeowner’s insurance even when you are traveling with them.  An inventory of your contents will help you decide the amount of coverage you need.

  1. Living Expenses

In case of damage to your home that requires temporary housing for you and your family, ALE (Additional Living Expenses) covers the expenses incurred while your home is being repaired or rebuilt.

  1. Liability

Liability insurance protects against lawsuits of bodily injury and/or damage to property caused by family members, guests, or pets.  For example, if you are visiting a neighbor, and you accidentally damage their property, you are covered by YOUR homeowner’s insurance.  Or, if your neighbor falls and injures himself on your property, their medical expenses would be covered under your policy.  You can choose the level of coverage you wish to carry on liability.

Spending a little extra time planning, while choosing your coverage, will be well worth the time spent, in case of emergency.  Eliminating the possibility of getting caught off guard, will be one of the best gifts you can give yourself and your loved ones.

Things to do on a Rainy Day in Palm Beach County

z_05-091515-2400Rainy days, especially when they fall on the weekend, seem to be the perfect invitation to curl up in your favorite arm chair with a good book and a cup of hot tea or coffee.  But, at times, there are those rainy days when cabin fever sets in or, you get the sudden urge to “see and be seen.”  If you find yourself needing to get out of the house, and taking a walk on the beach in the pouring rain is not your thing, don’t worry!   There is still plenty to do on a rainy day in Palm Beach County.  From art museums and restaurants to coffee houses and shopping malls, there is a wealth of indoor activities to keep you busy.  The Scherer Team has put together a few other suggestions you may have overlooked, but you just may enjoy:

Visit one of the Palm Beach County libraries:

When was the last time you had the opportunity or the time to visit your local library?  A rainy day is the perfect time to rediscover the library.  The mixture of the smell of books along with the peaceful quiet atmosphere can bring back memories of study groups and all-night research projects.  But, there are new things the library has to offer now too.  Media stations and quiet reading rooms are up for grabs as well as theme days such as cinema and craft day, coloring clubs for adults, and even board game night.  Even better, ask the librarian to recommend a book or author and take the time to discover some new literature.  Also a great outing for families with children, since there is a special area designed just for kids!  For locations, hours, and events scheduled for all of the Palm Beach County Public Libraries, visit www.pbclibrary.org.

Visit the South Florida Science Center and Aquarium:

Literally, you could spend hours on end in this place and still not see everything they have to offer.  Special exhibitions, such as Dinosaurs Around the World, bring a new and different experience each time you visit.  Of course, the permanent displays and shows are worth seeing time and time again.  The Aquarium, alone, will keep you entertained for hours, and the six daily planetarium shows, each different, will have you planning additional trips to the center.  With something for everyone, the South Florida Science Center and Aquarium is the perfect rainy day solution!  Visit their website for directions, hours, and ticket prices.  www.sfsciencecenter.org.

See a Movie in the IMAX Theatre:

If you haven’t taken the opportunity to visit the IMAX Theatre in West Palm Beach, a rainy day is the perfect time.  Seeing a movie in the IMAX theatre is like no other movie-going experience.  The truth is, it doesn’t even matter which film you see.  The pure thrill of the crisp clear and, sometimes, thunderous sound combined with the feel of the rumbling vibration is enough to keep you on the edge of your seat.  Add the clarity and detail of the picture on the screen, and all of your senses will be fully and completely entertained.  There isn’t a bad seat in the house!  So, you don’t need to worry about beating the crowd to stake your claim in the center of the theatre.  For movie times and directions, visit www.imax.com/theatres/muvico-parisian-imax.