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Buying a home is one of the largest financial decisions you will ever make in your lifetime. Before purchasing their next home, first-time buyers typically don’t think about the many hidden costs associated with homeownership.

Additionally, there are many things to consider, including location and price. But did you know that some sellers charge extra fees that aren’t listed anywhere?

Hidden fees are often overlooked or ignored during the negotiation and can add thousands of dollars to your final cost. This article will reveal hidden costs every buyer needs to know about before purchasing their next home!

11 Hidden Costs of Buying a Home

Below is a list of hidden costs and fees you should know upfront before buying a house in Sacramento

1. Real Estate Agent Fees

It’s crucial to have all the numbers calculated before buying property. First-time buyers need to realize that not all real estate agents are created equal. Some charge a flat fee, while others may charge by the commission, and some even charge a percentage of any profit they make.

2. Appraisal Fee

Buyers are typically responsible for paying the appraisal fee unless discussed during the negotiations and agreed upon other arrangements. The average cost of an appraisal falls between $300 and $500 in most states.  

However, if you discover something like foundation problems, it might be wise to get a second opinion to ensure that everything is fixed before the closing happens. 

3. Title Search Fee

The title search is essential in ensuring the property is clear of liens. A good agent will run a title search to ensure no liens, mortgages, or other debts against the property exist prior to you purchasing it. 

However, it’s the homeowner’s responsibility to check public records for additional information. A title report saves buyers time and money while protecting them against potential nightmares.

4. Inspection Fee

Buying a house in Sacramento requires getting a proper inspection done. Suppose you don’t know the property’s condition. In that case, it could lead to major problems down the road, meaning you will need more repairs than originally planned. 

This is why it’s important to hire a professional inspector who has the experience and plenty of references. For example, suppose you notice water damage to a ceiling or walls after moving into a new home. 

In that case, you’ll want to investigate further to determine whether a crack in the pipes caused the leak or if it was mold-infested wallpaper, which would require expensive replacement.

Many sellers and agents encourage buyers to hire a professional inspector and pay for the service upfront. The problem? The seller or agent recommends or hires most inspectors.

Partner with your agent to find an inspection company that meets all your requirements and give yourself peace of mind knowing what you are getting yourself into before closing the deal. 

5. Transfer Tax

A transfer tax is required in many states when selling residential property. While some sellers include this expense in the selling price, many conceal these costs until after closing. Knowing what to expect upfront is essential. 

When negotiating prices, it’s difficult to predict how much more you’re willing to pay without knowing exactly what the taxes will cost. Knowing what sales tax rates apply to the specific location will help you adjust your budget accordingly. 

6. Mortgage Insurance (PMI)

Many people don’t realize that if they don’t have at least 20 percent to use for the down payment on their new home, they will need to get mortgage insurance. This cost can be shocking to individuals who weren’t prepared to pay this extra fee.

However, mortgage insurance is a safety net that many lenders and investors rely on to protect their investments. Depending on your situation, mortgage insurance can come from a public or private insurer.

If you don’t meet the 20 percent rule, speak with your real estate agent or financial advisor to get more details about the costs associated with mortgage insurance.  

7. HOA Fees

HOAs aren’t always an itemized part of the total purchase price, so they are sometimes left off the list altogether. Ask about any hidden fees associated with HOA monthly dues. Some associations also charge one-time initiation fees. 

You should be sure to ask your realtor if the association charges additional fees and inquire about future upgrades to common areas like pools, gyms, community centers, etc. These can already have been approved by the board or are on the agenda for the upcoming year. 

8. Insurance Premiums  

Suppose you are looking to buy a home in an area subject to floods, hurricanes, tornadoes, or other inclement weather conditions. In that case, your mortgage lender may require that your homeowners’ insurance policy includes additional policies to cover these types of situations. 

It’s imperative to know these costs upfront since, in some cases, the amounts can be more than some people can afford. The last thing you want to do is purchase a new home where the insurance costs more than your mortgage. 

A prime example would be an oceanfront home or condo in an area that regularly gets hit by hurricanes or tropical winds. In that situation, the insurance premiums can be significantly higher than having purchased a property inland. 

9. Closing Costs 

Closing costs typically fall into two categories: “legal” and “real estate” expenses. Legal expenses include things like attorney fees, title searches, etc. Examples of real estate costs are taxes, appraisals, surveys, home inspections, and other purchasing expenses.

Partner with your agent to summarize these costs beforehand to have a good idea of what you need to pay before the closing date.

10. Moving Costs 

Suppose you are buying a house in Sacramento; your moving costs will depend on the size of your existing home, the number of items, and the distance. Make sure to get an estimate and add this expenditure to the total cost of your purchase.

Things to consider include: packing boxes, moving trucks, movers, storage space rental, shipping services, etc. Don’t forget to factor in the time needed to prepare your new home and clean your existing one after the move!

11. Utility Costs

Some bills may be lower than you’re used to paying, but in other cases, your utility costs may be higher. Be sure to budget the estimated utility costs, so there aren’t any surprises once you settle into your new home.

Bottom Line

It pays to know all the hidden costs ahead of time when buying a new home. Be sure to partner with your real estate agent and financial lender to get everything on paper before committing to the final deal. Knowledge is power, and it can save you a ton of money and headaches! 

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