So, you’ve decided to take the plunge and purchase your first home. No more throwing money to the wind with a rental. No more fighting for a parking spot in your apartment’s parking deck. No more lugging groceries up two flights of concrete steps. You’re ready to own.
While it can be liberating to truly take ownership of your living space, it’s important to be aware of additional costs associated with buying a home. Even if you’ve been squirreling away money for months (or even years!) to go toward that down payment, additional expenses can creep up and cause some headaches without proper preparation. To ensure there are no surprises, here are five costs all first-time homebuyers should realize:
Home Inspection
Once you’ve submitted an offer on your dream home, you’ll want to make sure it’s not a living nightmare with a certified home inspection. A certified home inspector will examine the property from top to bottom—before you ever go to the closing table. If structural damage, mechanical issues, or other problems are discovered, you’ll be able to negotiate the repair terms with the seller before the deal is finalized on the home. However, if you opt not to negotiate these repair terms, you’ll have to assume the responsibility of fixing these issues yourself.
Cost: Between $200 and $600, up-front and out-of-pocket. Trust us—it’s worth every penny to have peace of mind that you’re not loading your life into a lemon. When you take into consideration the potential thousands of dollars the inspection can save you, this detail is definitely money well spent.
Appraisal Fee
Your mortgage lender wants to make certain the home he or she is about to loan you all that money for is worth it. Before finalizing a mortgage loan agreement, you’ll have to have a home appraisal done. During this process, the lender will hire an independent appraiser to assess the true value of the property that’s for sale. The home appraisal includes documentation of various aspects that make the home valuable (i.e., a deck or finished basement) and research of what comparable homes in neighboring areas have recently sold for.
Cost: Between $250 and $600 depending on size and location of the home. Home appraisal fees are up-front costs charged directly to the borrower by the lender.
Title Services
Title services fees can pile up with a quickness These costs cover a title search of the public records for the property you’re buying, notary fees for the individual witnessing your signatures on all necessary documents, government filing fees, and more.
Cost: Between $150 and $400; make certain to get a line item for each cost to best understand each fee you’re paying.
Furnishing Your Home
Depending on your taste and your ability to DIY, the cost of filling up your house with all the stuff that’ll make it feel like home can be an expense many people don’t take into consideration. A common problem many first-time homebuyers run into is spending so much money on the up-front fees that they become “house poor” and end up having to live with a pretty bare space until the funds can be generated to purchase furniture, accent pieces, art, etc.
Cost: $5,000 to $15,000 per room (on average). To cut costs, consider hanging on to home furnishings and décor that’s still in good shape.
Home Maintenance and Repair
Ok, so the upside to renting is that the landlord is responsible for ponying up the cash needed for any necessary upkeep. As a home owner, all maintenance and repairs become your responsibility (adulting, amiright?). These costs can range from everything from lawn care services to a fresh coat of paint on the interior and/or exterior of the home to replacing kitchen appliances, water heaters, the HVAC system, and more. Ownership means long-term commitment—and with that can mean significant spending to make certain your home is actually livable for the long-haul.
Cost: $200 to $20,000, depending on the type of maintenance/repair needed. For example, in the U.S., the average cost of installing a new system of forced-air ducts and an air conditioning unit costs between $4,000 and $15,000. In Jefferson County, the average price of painting a home in 2018 cost homeowners between $3,500 and $6,000.
Ready to buy – for real?
Ok, so if none of these fees has you clinging to your lease agreement, you have cause to get excited. ēCO Credit Union is proud to offer a 100% financing option as a smart solution for the first-time home buyer. Rather than waiting months (and potentially missing out on that dream home) to save up a daunting down payment, you can go ahead and stop paying to live in someone else’s home right now! And if you’re the type who has been saving up for a while for the down payment, you can use that cash to cover all those previously unknown costs mentioned above. With no PMI, fast pre-approvals, and local service, ēCO Credit Union makes this no down payment option a no-brainer. As a bonus, if you apply between now and May 31, you’ll enjoy the benefit of a $100 VISA® Gift Card and a whopping waiver of $450 in underwriting fees (Seriously—think about what you could put that money towards. New fan pulls and chair rail or a rug that really ties the room together!).
Subject to credit approval. Current ēCO loans not eligible.