When it comes to finding your dream home, having just enough in your bank account to pay for the asking price isn’t going to cut it. The official purchasing of a home will have a lot of extra costs that you don’t always hear about or may not be aware of if you are a first-time homebuyer. Here is a list of things you will want to be prepared for.
Down payment - money that you will have to pay to your lender in order to purchase the home. This will be a given percentage of the total of the home’s purchase price. Having this chunk of money in your bank account is very important!
Homeowners insurance - while the price of this will vary depending on your policy, state, and home, it is a very important expense that homeowners must take on. Homeowners insurance is coverage that may help repair or replace your home and your belongings if they have been damaged by things such as a fire or robbery. You can also add on policies such as Earthquake coverage for example, in case of a natural disaster (which is common in Alaska!). Normally, this added cost can be fixed into your monthly mortgage payment.
Closing costs - typically around 2-5% of the purchase price of the home, closing costs include things such as lender fees, appraisal fees, title searches, title insurance, taxes, surveys, deed-recording fees, and credit report charges.
Home improvements (unless negotiated as part of the home purchase agreement) - if there are any issues with the home when you move into it, you are responsible for covering the costs to fix it. That is why the next homeowner investment is an important one!
Home inspector - hiring a home inspector will ensure that the home is in good condition and they will check for everything from electrical wiring, foundation quality, rotting wood, mold and so on. If you can catch any underlying issues before purchasing the home, you can have the seller cover these costs by negotiating them into the home purchase agreement.
Monthly Bills - homeownership comes with the responsibility of paying utility bills such as water, gas and electric and other monthly payments like town taxes or HOA dues that you will also have to take into consideration since it will be on top of your monthly mortgage payments.
Appliances and furniture - unless the home’s previous seller has left every single thing behind, there may be a chance that you will need to buy your refrigerator or washer and dryer and of course, completely furnishing a home will also take an initial chunk out of your wallet.