Hidden Homeowner Costs

Budgeting for buying a home can be difficult enough when you’re just weighing mortgage options and a purchase price. But there are many other factors that go into the cost of home ownership. Some of them are one-time expenses that you’ll pay during the home buying process, while others will be recurring costs for as long as you own the home.

Closing costs
There are several smaller fees that add up to a rather large sum when you’re going through the closing process—loan fees, title fees, and more. They typically in Arizona add up to 2–3% of the purchase price. For a $300,000 home, that’s in the neighborhood of $6,000 to $9,000, so be sure to budget for it. You can easily get quote for these costs from a lender or title representative.

Appraisal
Your lender (if you’re getting a loan) will require an appraisal, and the appraisal fee (usually $450 to $600) is customarily paid for by the buyer in Arizona. Some lenders will ask for the cost to be paid for upfront when the appraisal happens, while others will allow you to wait until closing day. Be sure to talk to your lender about their costs and when they collect the fee.

Inspection
The few hundred dollars you’ll pay for a home inspection is money well spent, but it’s something you have to keep in mind during the purchase process. You’ll have the peace of mind of knowing the house is free from any major issues, and you’re making a smart, solid investment. There are also inspections beyond the general inspection such as termite, sewer, mold and more that you may want to consider depending on the property you’re under contract on. While they add on more upfront costs, they can save you money in the long run if you can get the seller to make repairs.

Insurance
Although homeowners insurance isn’t legally required, it’ll almost certainly be required by your lender. Further insurance, such as flood insurance, may also be required (depending on your location). Be sure to shop quote during your inspection period so that you know it’s an amount you can afford. After your inspection period you’re not able to get out of the contract if the amount is higher then expected.

Home Owners Association
If you’re living in a property or community with shared spaces, you’ll almost certainly have an HOA fee. This pays for things like street maintenance, maintenance of common areas, and for recreational facilities like gyms and swimming pools. Also there are often additional one time HOA fees such as transfer fees. It’s important to know what they are, have them in writing, and write out who is going to pay for what. This is done on the HOA addendum in AZ. You also want to ask if there are any known assessments coming up, and these will tack on extra to your monthly fee.

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