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5 Expenses To Consider When Buying A Home
The dream of buying a house is shared by countless people and is seen as a landmark moment in an individual’s journey to attain financial freedom. Whether you’re in a buyer’s or a seller’s market, you'll want to buy a home as soon as you come across the right one. But it's not always that simple. There are many financial issues that will determine whether you'll be able to purchase the house, as well as the terms of your mortgage.
The real estate industry is growing rapidly and is one of the most lucrative sectors today, which means that there’s a rush among homebuyers and investors and the struggle to buy a good home and a good property is real.
Sure, virtual real estate viewings have its benefits, but the process is about more than finding a home you like. It’s about finding a home you can afford and enjoy for years to come.
When buying a house, you consider all the obvious costs – you look forward to affordable home prices, good housing loans and lower mortgage rates, etc. However, you miss out on many other pinches that are involved in this complicated process of buying a house. These hidden costs raise the quoted price of the property, and the buyer ends up shelling out a lot more money than planned.
So, let’s go through some of the most common extra expenses that are often overlooked by homebuyers, especially the first-timers.
Stamp Duty and Registration
Stamp duty is a compulsory fee that the buyer is supposed to pay the state government to get the house registered under his/her name. These charges may differ from state to state from 5-7%, and the house won’t be registered in your name unless the stamp duty is paid. Registration is the full and final legal agreement between the buyer and seller indicating change of ownership; and the court charges a registration fee for it, which is generally 1-2%. This may seem like a small amount but sums up to a lot.
Builders charge an advance maintenance or maintenance deposit of up to 2 years; this usually comes under common amenities, parks and lightings. In existing buildings, it is charged as a deposit by society members in case of any damages that occur in the future. This amount, the same way as other home charges, gets pretty big depending on the number of amenities provided or on the existing maintenance fee. Sometimes, clubhouse membership is also included in this fee and the amount rises even more.
If you’ve sought a registered broker’s help to get a property, you’ll also have to shell out a brokerage fee which can be up to 2% of the property value, plus taxes. Usually, the brokerage charge percentage is lesser for expensive properties and more for medium-priced ones. Check for the brokerage fees before signing on the dotted line.
Although an inspection is not required, it’s a good idea to have one. Similar to the appraisal, you’ll bear the cost yourself, so this fee should be on your list of expenses not to forget when buying a home. Every homebuyer should consider at least two types of inspections. The first is a standard home inspection, wherein an inspector assesses the overall condition of the home you want to buy – including the roof, wiring and the heating and air conditioning system – to make sure everything is in good working order. Secondly, you may also want to get a termite inspection done, which has a separate fee.
These are also major expenses that are borne by the homeowner to make the property liveable. These include interior decoration charges, woodwork and carpentry charges, water connection and electrification expenses, piped gas connection, flooring and furnishing charges, painting and waterproofing expenses, etc. depending on the homeowner’s budget and requirements and the quality of products and services used.
For many of us buying a house is like achieving a huge milestone in our lives. When we plan our savings and investments according to, not only for the cost of the property but, also for other additional expenses to be incurred, then we will have more clarity and avoid the burden of so many expenses before buying our dream home. That being said, take your time in deciding whether you’re ready to buy a home. Opt for virtual site visits and virtual open house sessions to settle on a house that fits within your budget, including all the above-mentioned expenses.
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