I have told many people with ambitions of buying a home to take their time and do their due diligence in learning what it will take to afford and maintain property as an American homeowner. My friends who have purchased their own homes have learned there are pitfalls waiting for if you don’t know where to look. It does not matter if you are buying with a conventional mortgage, a VA home loan, or an FHA mortgage–you’ll need to anticipate certain costs ahead of time when buying a home.
And if you plan to own property with the intention of renting it out, there are additional costs to plan for. None of these expenses is enough to realistically push most borrowers away from applying, but if you get taken by surprise with some of these expenses it can make it harder on your budget. Here are some expenses I warn people to add to their list of considerations when shopping for a house.
Buying A Home? Don’t Skip The Home Inspection
When you make an offer on a home, the lender will have the house appraised to determine the fair market value and to make sure the house meets minimum standards. Emphasis on MINIMUM. These appraisals are commonly referred to as “inspection” but they are NOT INSPECTIONS of any kind.
If you, the borrower, do not arrange and pay for a home inspection using a licensed professional home inspector, you are doing the equivalent of buying a used car without test-driving it. Anticipate this expense (which varies from market to market) and do NOT skip the home inspection assuming the appraisal would have told you if something is wrong with the home–it will not.
Most house hunters know they will be expected to pay property taxes. What’s not as well known? The fact that you can lose your home if you don’t stay current on those taxes. Some kinds of mortgage lending (reverse mortgages especially) actually have a requirement that the borrower remain current on property taxes as a condition of the loan’s approval AND as a condition for not having the loan declared “due in full”.
Local Pest Control Issues
As a landlord in a multi-unit property, or as a homeowner in a single-family house, Pest Control is an expense you’ll naturally have to anticipate. But some areas of the country–such as Texas and Florida–have unique pest control issues that may require additional spending.
Texas has a major fire ant problem in some areas, but New Yorkers are more concerned with bedbugs and cockroaches, wherever you are located if you have issues with pests, you should act immediately and hire Pest Control Experts to clear any potential risks and danger. Learn what the unique pest control problems (including mold and other potential issues) might be in the real estate market you’re shopping for a home in.
Here’s another area where house hunters are usually well aware that they will be required to maintain the lawn and other areas outside the home. But what isn’t as well-known is that buying property often means joining a homeowner’s association or condo owner’s association. In such cases, certain types of lawn care may be required in the bylaws of the agreements you sign when joining such a group.
Be sure to ask if there are any specific lawn care requirements that may force you to modify your budget after you move in. Are there agreements for a group-payment method to maintain certain areas in your condo building or neighborhood? Ask ahead of time–the answers may surprise you.
Joe Wallace specializes in personal finance, military affairs, and consumer protection topics. Since 1995, his work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and collects unusual vinyl records, which gives him an excuse to write the vinyl blog Turntabling.net.