Costs Associated With Home Buying

Beware of Additional Costs When Buying a Home

It’s a good idea to plan on additional costs when buying a home. There always seems to be at least one surprise cost, and sometimes it’s a deal killer. Often times it sends the buyer scrambling to come up with some unexpected last minute cash!

It doesn’t matter if the home is in Santa Clarita, or anywhere else, buying a home can be full of surprises. See below a number of additional costs to consider when buying a home.

There are at least 13 additional costs that could occur and home buyers might not have expected or planned these costs in their home buying budget. Some costs might be geographic specific, so it’s recommended to check with your local real estate agent to verify before making a decision to move forward with a purchase.

While we can’t cover all possibilities for additional costs in this short post, we do provide the most common. Contact us directly with any questions, Matt & Meray Gregory, 661-713-4799.

Additional Costs When Buying a Home in Santa Clarita

Most Common Added Costs

  • We highly recommend our buyers pay for and obtain a home inspection. The reasons for this are many, but most real estate professionals agree, it’s great advice! The cost of the inspection varies depending on the location and size of the home, but in our area it costs from $225 to around $350. Whatever the amount, it’s in addition to the down payment. This is worth the additional costs when buying a home.
  • Another additional home buyer cost is the property tax. Taxes are usually pro-rated during escrow and often result in an added out of pocket expense for the buyer. The final amount is unknown until the escrow company verifies property taxes paid, and when the next amount is due. Here’s how it works in California. Most homeowners are aware they are responsible to pay the semi annual property taxes. As an example, if the seller has already paid the property taxes for the next six months, and the home buyer takes occupancy at month two, the home buyer must reimburse the seller for those four months already paid. The arrangements are made by the escrow company, but for the home buyer, it’s sometimes a surprise and another unexpected additional expense. These property taxes could be a good chunk of cash!
  • Two other costs often come as a surprise. Verify with youyr realtor if the property you are considering buying comes with special bond assessments, a Mello Roos tax and/or Homeowner’s Association(HOA) Fees. These costs can be quite hefty and must be tacked on to the total monthly payment equation. If your agent isn’t warning to you of these potential additional costs, you may want to consider finding another that is also an Accredited Buyer’s Representative.

When calculating the cost of buying a new home there are almost always
some surprises and many people forget to include some of the
miscellaneous fees, taxes and insurance costs associated with owning
property. All of these additional costs can definitely add up, and put what you
thought was an affordable home out of your financial reach on closing day.
Some of these costs are one-time expenditures that can be included in the
 closing costs, or even in the mortgage payments, but others, such as
property taxes and homeowners association fees, can wind up as monthly or
annual expenses for which you need to budget appropriately.

13 Additional Costs to Watch For When Buying a Home

Here’s a list of 13 additional costs you may incur when you buy a new home.
 Budgeting in advance will help you turn what might be a financial nightmare
 into a smooth transition as you move into your dream home.

  1. Appraisal Fees: The lending institution handling your mortgage may require an
appraisal on the property before they proceed with the loan. The buyer is
responsible for this cost, which may run between $175 and $300.
  2. Property Taxes: Your lending institution may opt to include the cost of your
property taxes into your mortgage payment, depending upon the size of your
down payment or other factors. If they choose not to do that, you will be
 responsible for the annual or bi-annual payments yourself, and you may need to
provide annual proof to your lending institution that these taxes have been paid.
 Often buyers are surprised in the pro rated amounts they are responsible.
 Example: If seller has already paid through the end of the tax year and you buy the home
three months prior to the end of the tax year, you must reimburse the seller for the three
 months already paid in advance!
  3. Property Survey: Your lending institution may require an updated property
survey if you are not the first owner or original owner of the property. Surveys can
be moderately expensive, ranging from $700 to $1000

.
  4. Property Insurance: Your lender will require proof that you are carrying a
homeowners insurance policy on your new house that will adequately cover the
replacement value of your home, which is different from the purchasing price.
Also, be sure to ask your Realtor about any possible Mello Roos Taxes!
  5. Service Charges: Most utilities, such as water, power and cable, may require
additional deposits or installation fees for a change of service.
  6. Legal Fees: You may elect to have a lawyer review all the paperwork for the
purchase of a home before closing. Rates can vary greatly according to the
expertise of the lawyer, and the size and complexity of the real estate transaction.
  7. Mortgage Broker Fees: Mortgage brokers can charge you a fee to secure your 
financing with an appropriate lending institution, although many will try to get the
lending institution to share or absorb these fees.
  8. Mortgage Loan Insurance Fees: This type of insurance, which can cost from 0.5
to 3.5% of the total mortgage, can usually be worked into the monthly mortgage
and property tax payments. You may be able to avoid this type of insurance if the
equity in your house is great enough.
  9. Moving Costs: The costs for a professional mover can be extremely expensive
for a van and three movers. These prices can rise significantly during peak
seasons. Also, even if moving yourself, there are still costs involved, so be
prepared.
  10. Homeowner’s Association Fees: Condominiums, townhouses, and single family
homes in planned communities may also charge a monthly homeowners
association fee for the maintenance of common grounds, recreational areas, and
other amenities. In some neighborhoods, it’s surprising how expensive these
monthly HOA fees can be!
  11. Water Quality Certifications: If the water supply for your new home is provided
by a well, then you should have the quality checked by a local expert. These fees
may or may not be the responsibility of the new owner, depending upon where
you live.
  12. Local Improvements: Property taxes can be affected dramatically if large
municipal improvements, such as the addition of sidewalks, water treatment
centers or sewage systems, have been made recently.
  13. Land Transfer Taxes: These taxes are generally assessed whenever a piece of
property changes hands. The amount can vary greatly, especially if the value of
the land has increased substantially since the last change of ownership.

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