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5 Hidden Costs of New Homes All Buyers Should Know

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5 Hidden Costs of New Homes All Buyers Should Know

Buying a home is a daunting prospect for many, but it is a well-known truism that it is better to buy a home than rent one. When you rent a place, you are just throwing money away while buying a home is an investment that will hopefully pay off.

But that comforting logic starts to fall short when you consider the hidden costs of owning a home. Just as an individual moving out of his parents’ home must deal with responsibilities he never considered before – like cooking – a homeowner must consider additional costs and expenses that he did not have to worry about when renting. Here are five such expenses to consider and advice on how you can reduce their cost.

1. Home inspections

The first hidden costs show up before you even close a deal. You can take a look at the house all you want beforehand, but many lenders will require you to hire a professional home inspector before you sign. Even if the lender does not, you should hire one anyways. A professional home inspector can make sure that your home does not have any sudden surprises such as poor wiring or a termite infestation, and require that the seller fixes those problems.

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Hiring a professional home inspector can cost a couple hundred dollars, but it can save you a great deal and prevent you from buying a faulty home. Just be prepared to eat the initial expense.

2. Closing costs

You inspected the home, found that everything is good, and have your offer accepted. Then you find out that you have to pay an additional few thousand dollars up front in the form of closing costs. Closing costs are additional fees such as escrow fees, attorney fees, and other expenses that are usually on the buyer. Zillow states that the average buyer pays about $3,700 in closing fees.

While it is not possible for a buyer to completely avoid these costs, it can be lowered. Shop around with multiple lenders to try and get the best deal on your mortgage and ask if the seller may be willing to cover some of the costs.

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3. Moving

You may be able to get out of moving expenses if you have a wide cadre of friends willing to help you out and if your home is nearby. But the odds are that you are going to have to hire a moving company. If you rely on a professional moving company, then the average cost of moving out of state is over $4,000

If you are moving a long way and want to budget, then you can lower the costs by making sure you are only moving the essentials and possibly taking care of the move yourself with a U-Haul truck. But be prepared to pay a few extra thousand dollars for a clean move without chaos.

4. Maintaining your home and yard

One of the biggest changes towards owning a home is the fact that when something goes broke, it is on you and not the landlord to fix things. And there is always something that needs to be improved or fixed.

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You may be willing to mow the lawn and take care of the yard work yourself. However, that still entails the cost of purchasing the necessary equipment yourself as well as the time needed to mow the lawn and so on. Then there are other expenses such as fixing your heating, air conditioning, and plumbing. While it is possible to handle issues like this if you really know what you are doing, it is just as likely that you burst a main and lose far more money in the resulting repair costs.

You do not want to skimp on home repairs if you want to uphold its value, so budget a certain amount of money every year for repairs. There are a few guides for how much to save, but you should generally be looking to save something around one percent of the home’s value every year.

5. Property Taxes

Death, taxes, you know the saying. But what you may not know is that your mortgage’s monthly bill will also account for property taxes and homeowner’s insurance. This is especially true if you’re looking to earn an investment with a 1031 exchange property. If you use an escrow account, which is required if your down payment is less than 20 percent of the home’s value, then you don’t pay your property taxes directly. Instead, you send your money to a mortgage company who pays your taxes for you. And there is also the scenario where you can be hit with a payment for a couple months’ worth of property taxes right when you move in.

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Dealing with property taxes can be incredibly confusing and varies from area to area. The best advice is to be prepared and talk with your mortgage company about how much you will have to pay as well as any potential surprises.

Featured photo credit: Moyan Benn via flickr.com

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Last Updated on January 13, 2022

10 Cheap And Amazing Honeymoon Ideas

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10 Cheap And Amazing Honeymoon Ideas

A honeymoon is important.  The wedding is over.  The months, or even years, of stress and planning are finally over.  It’s time for the two of you to relax, settle in, and start enjoying your time together as you embark on your first journey as a family.

To make the most of this time for the least amount of money, it’s important to focus on what you want out of a honeymoon.  This isn’t your typical list of touristy honeymoon locations everyone goes to.  Rather, it’s a list of cheap honeymoon experiences a couple can enjoy together, regardless of where it’s at.

1. Camping

A week long camping trip is a fantastic way to see how you mesh together as a couple.  You’re put in a low impact “survival” situation where it’s just the 2 of you and nature.  You have a chance to see how your new spouse handles themselves when left with the basics of life.  There are amazing national parks all over the United States where you can camp for a week for $20-30, disconnect from technology, and enjoy some of the natural wonders our nation has to offer.

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2. Staycation

You don’t have to go anywhere for a honeymoon.  In fact, the tradition of taking a honeymoon vacation is a relatively new one.  Prior to the 19th century, a honeymoon involved staying home together for a month to get to know each other physically.  Think of how blissful it could be to take a full month off work, disconnect from the outside world, and focus entirely on projects together.  You may not be wowing your friends and family with pictures of some exotic location, but they’ll be envious of your escape from the rat race nonetheless.

3. Island Getaway

People tend to overspend on their honeymoon vacations to Hawaii, Tahiti, etc.  Going to these places doesn’t have to be expensive.  You don’t need to stay in a 5 star resort when you’re on a Best Western budget.  You’re there to be in the atmosphere of the island, not a hotel room. Book a cheap flight and sleep in a hotel alternative, on the beach or in your car.  It’s the view in paradise that really matters.

4. Fancy Resort

Book an expensive resort, spa, or retreat in the city you live in.  While this may seem counterintuitive as a cheap destination, when you consider your savings on airfare and other travel costs, you can afford to be treated like royalty within your own city limits.  If you book a honeymoon package, you’ll end up with a lot of free amenities and extra attention.  There’s no need to fly halfway across the world to live the good life.

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5. Road Trip

The journey is often more fulfilling than the actual destination.  If you fly out to some exotic locale, you’ll be stuck on a plane for 8-30 hours.  Rent a luxury car, pick a handful of places you each have always wanted to visit, and go on an adventure.  You can keep food costs down by packing your own snacks, but it’s always a good idea to sample the local delicacies wherever you go, even if it’s only a few states over.

6. Charter a Boat

If the ocean is your thing, a week-long cruise can cost you $1500-$3000 per person, depending on the destination.  You also have to factor in travel costs to and from the cruise, alcohol, souvenirs, and on-shore excursions.  You’ll also be surrounded by people.  For the same price (and often much cheaper), you can charter your own boat and enjoy the experience in private.

7. Las Vegas/Atlantic City

If gambling is your thing, these are the places to do it.  Which one you choose depends on your preference, budget, and proximity.  The way to make this vacation cheaper is to gamble smart.  Stay away from low odd tables (i.e craps, roulette) and read up on the MIT blackjack strategies to beat the house.  If you do it right, you can win enough for a free trip (and gain a valuable team skill in the process).

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8. Themed Retreats

There are weeklong retreats all over the world where you can fully immerse yourselves as a couple into a hobby you’re both passionate about.  Go on a yoga/meditation retreat, a ranch, a vineyard/farm, a backpacking adventure, treasure hunt, or whatever you’re into.

9. Working Honeymoon

Your honeymoon doesn’t have to be a vacation.  For a truly memorable experience, dedicate a week to a charity or volunteer organization.  You can drive out to a campground to help restore it in the offseason.  Maybe you’ve always wanted to volunteer to help out your local animal shelter, plant trees, help the homeless, etc.  Use the time to do something together as a couple that will fulfill you spiritually while contributing to the community.  Just because you’re on a honeymoon doesn’t mean you can’t be productive.

10. Festivals, Fairs & Special Events

Every city, state, and country has festivals, fairs, and special events.  Find one you’re interested in.  If you time your wedding right, your honeymoon can be a trip to one of these festivals.  Burning Man, SXSW, Bonnaroo, the Renaissance Fair, regional harvest festivals, Mardi Gras, New Years Eve in Times Square, a movie premiere, or whatever you’re into.  If you plan your honeymoon at the right time in the right place, the possibilities are endless.

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Featured photo credit: Josue Michel via unsplash.com

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