Like every true millennial, I love HGTV. At *least* once a week I spend some time with Jonathan + Drew or watching dumps get flipped into dream homes. Some people may consider this bad TV, but I eat it up. House Hunters is the best + worst that HGTV has to offer + we eat it up. A potential buyer – usually a young couple – with some random quirky demand like all the closest have to open east + searches a US city (or elsewhere if you’re going House Hunters Internationally) with a seemingly arbitrary budget. One of the ways House Hunters fails viewers, in my opinion, is how it handles the budget. The show never delves into the true cost of buying a home.
Sure they have $425k for a loft in downtown Cincinnati, but that’s it. They claim they can’t go a penny higher. If they’re putting an offer in at $424,999, am I to believe that dollar is supposed to cover the closing costs + other fees? Not hardly. I asked some realtor friends + those with homes to give me the low down on the true cost of buying a home so I can know what fees + expenses House Hunters has been shielding me from.
The most obvious costs when buying a house is your down payment. Depending on the kind of load you secure for your house, you could be putting anywhere from 3.5% to 20% down on your new home. Assuming your house costs a nice round $250,000, you should have between $8,750 to $50,000 to put down. Don’t forget about the $200-400 home inspection you’ll want before putting down your money!
Closing costs are another fee associated with buying a home. Depending on whether you’re in a buyer or seller’s market, you might be able to negotiate closing costs be paid by the other party. If you can’t, however, expect to pay roughly 3.6% or $8,200 for our $250k house based off an average interest rate and 8% down. Despite how HGTV has presented it, closing costs aren’t one total cost, they’re the complication of fees that make up the true cost of buying a home. Some fees included in closing costs are a home appraisal, credit report, underwriting fee, and a home inspection.
Another big cost you probably don’t consider is property tax, especially if you’ve never owned before. Property tax can be taken by the state, city, and county + is based on the appraised value of your home. Our imaginary $250k house would cost $3,738 in property tax every year – and that is always subject to change. Property tax is paid twice yearly + your realtor should be able to help you understand the costs + deadlines.
Don’t forget the worst fee of all, the HOA fee. Homeowner’s Associations can be a great thing. They can plan events, keep things orderly, and deal with the city on large-scale issues. However, they can also be tedious if they have rules like what color you can paint your front door + when you have to put your Christmas decorations up. They can also be pricey depending on the amenities offered (some include landscaping) Be sure you know what you’re getting into both legally + financially before buying a home in an HOA neighborhood.
When it comes to shelling out for your dream home, it’s more than just the down payment + fees. You also have to think about the other expenses that go along with your new home. Insurance is a big one. You may have had renters insurance for your apartment, but homeowners insurance is a whole other ballgame. Depending on what you need (i.e. what natural disasters are common in your area) you can expect to pay $500-2,000 every year in insurance.
Now that you’ve got your house purchased + insurance it’s time to move in! Oh wait, that’s another expense you forgot about! If you’re moving from a one bedroom apartment in the same city, you can expect to pay around $600-800 in moving costs. Before you have those movers bring in your things, make sure you’ve done those little fixes like new paint, deep cleaning the carpets, or getting new blinds. Did you not notice your home had no ceiling fans? A summer move isn’t the time to neglect to realize that. You also don’t want to forget the cost of any new furniture you’ll need (or want) to fill up your new space.
Since you now officially own the home your things are stored in, you’ll want to consider warrantied for 1) your home and 2) and a warranty for your big appliances like your HVAC unit. Having done marketing for HVAC + plumbing companies I am here to tell you, PREVENTATIVE MAINTENANCE IS WORTH THE COSTS. Not only do you have to replace broken appliances, but you also have to consider any additional costs based on their age.
Old air conditioners, water heaters, etc. will not be as energy-efficient as what you might have had in your apartment. The same is true for windows. If your new place is substantially larger, the costs of heating + cooling that space will be another true cost of buying a home you need to prep for. Don’t forget you’re now paying for things like recycling + one-time shut on costs + installation for your wifi + cable (if you’re still into that sort of thing).
The Emotional Costs
One of the hardest true costs of buying a home that people don’t consider is the emotional cost. The process of buying a house is tedious + sometimes heartbreaking. You visit dozes – sometimes more depending on your market – of homes looking for the right one just to have another buyer chosen over you or a contract fall through. Even once you have a home, purging your things + having some get lost or broken in transition. Don’t even get me started on the toll a complicated renovation can play. If HGTV has taught me anything, it’s that you should hit some things with a hammer to relieve stress. At the end of the day, once you make it through the whole process, you’ll be making a home in a house you love + that is priceless.
Whether your budget is $250k or $2.5 million, expenses + fees can sneak up on you. Be sure you know the true cost of buying a home before you visit one way out of your price range. Much like buying a wedding dress, you don’t want to fall in love with one you can’t afford.