Unexpected Costs Millennials Might Face When Buying Their First Home
Millennials are said to not be interested in purchasing homes because they’re a generation that loves to enjoy experiences and doesn’t like to be tied down to anything. According to CNBC, homeownership in America is a not as common as it once was – especially for today’s young people. Researchers found homeownership declining most steeply among people under the age of 30 when compared with other generations.
According to a survey done by Bankrate, nearly half of all homeowners have buyer’s remorse, and that number rises to 63 percent for millennial homeowners. The reason being that the costs of owning a home, including unexpected maintenance and other hidden costs, are the main reasons for regret. If you’re a millennial buying your first home, here are the unexpected costs you may face.
Closing Costs
Although, the interest you’re going to pay on the mortgage and the amount of the down payment are important factors when purchasing a home, there is one more thing that homeowners must keep in mind. Millennials need to remember that after your offer is accepted, there will be closing costs that need to be paid in order for you to purchase your home. Closing costs may vary, but they’re usually between 2 and 5 percent of the home’s purchase price, and these costs don’t include lender’s fees, appraisal fees, escrow fees, title and/or attorney fees, interest and other miscellaneous fees that need to be paid upfront. Make sure that you are prepared for these fees.
Home Inspections
A home inspection may feel like a waste of money, but no matter the age of the home, there can be costly troubles that may be unknown to you. You want to make sure your new home is in the best condition possible, and if there’s things that need to be addressed then you should know about them upfront. The seller or agent will always do what’s in their best interest and you should do the same by thoroughly inspecting the home, so someone else’s problem doesn’t become yours. An inspector will usually let you know about any problems with the home; whether each problem is a safety issue, major defect, or minor defect; which items need replacement, and which should be repaired or serviced; and items that are suitable for now but that should be monitored closely.
Maintenance and Repair
As a homeowner, when things break everything is on you – you no longer get to hold the landlord responsible. This is another unexpected fee that millennials should be prepared for. From the water heater to the boiler to the air-conditioning system, you have to be prepared for unexpected emergencies.
Ongoing Taxes and Insurance
Millennials should always remember that when budgeting their monthly payments, you need to focus on the price of the home and what the mortgage will cost you. You should also keep in mind that the monthly payments will include taxes and insurance. This is called your PITI, which stands for Principal Interest Taxes and Insurance. If you take out a fixed loan, your principal and interest is going to remain the same throughout the life of your loan, but your taxes and insurance can fluctuate. This is a hidden cost that many first-time home buyers are not prepared for.
Higher Utility Bills
A hidden cost many don’t consider is the utility bills. When you buy a home that means you’ll be paying for gas, electric, and water. In some instances, you’ll also have to pay for trash pickup. The best thing to do prior to buying a home is to find out what the average bills for utilities are, so you can ensure that you can afford a new home.
Tips Prior To Purchasing Your First Home
It’s always important to be prepared prior to making your first big purchase like buying your first home. Make sure you are aware of all the extra costs that come with buying a house and plan accordingly. Don’t assume that you can’t afford it and seek professional advice. Research your options and make your plans, while you’re at it. Examine your finances – your current financial situation and credit history will determine the amount you qualify for and set the budget for your home search. Make sure you check in on current mortgage rates – it can cost you to wait.
