There are many reasons people choose to buy, least of which is the idea that it makes more sense to own rather than lease when the time comes you can afford it. Why spend money on rent that you’ll never see again rather than put it towards home ownership?
What a first time home buyer may not be aware of, are some hidden costs that should be taken into consideration along with saving for a down payment, what kind of mortgage is best and other real estate fees. You might just be calculating your mortgage but don’t forget about:
1. Special assessments
Thinking of buying a condo? Most people are aware of additional maintenance fees however in some cases, a special assessment – for example, new work is required in the building – creates a sudden unexpected cost, which could be a huge figure. Although special assessments should be included in the status certificate, sometimes details get missed. Talk to your real estate lawyer about title insurance, which would cover such costs or something even worse.
2. Home maintenance costs
With living in a house there comes taking care of the house – and we’re not talking about dusting and vacuuming. Any part of the house may require repairs from time to time ie: hvac, insulation, windows, roofing, etc. Not to mention furnace rentals and of course paying for all the utilities. Services can also include: landscaping, snow-clearing, pest control, gutter cleaning and more; not to mention a plethora of home care tools and equipment (ie: alarm system, lawn-care supplies, snow blower, etc.)
3. Municipal bylaws
Parking tickets happen sometimes but what’s that got to do with owning a house? Well, as you know, infractions mean paying fines and as a home owner there may be many local bylaws that you must be aware of else face the penalties should you break them – and that means an unexpected cost. Remember that the next time you have guests for the weekend who need overnight parking (and a permit to do so!)
4. Mortgage Default Insurance
It’s mandatory for home buyers who pay less than a 20% down payment to get mortgage insurance, which covers the liability of not being able to make mortgage payments in the future. This may or may not be bundled into your mortgage payments.