If you've never purchased a home, the process can be exciting and intimidating. It's a big stress with lots of questions, including how much money it'll really cost you.
According to a 2014 National Association of Realtors Profile of Home Buyers and Sellers, 33 percent of home purchases were made by first-time homebuyers, compared to their long-term average (since 1981) of 40 percent first-time buyers.
Aside from the purchase price of the home, what else can you expect to pay?
Costs and Commissions
"Costs are always negotiable," says Casey Fleming, mortgage adviser at C2 Financial Corp. and author of "The Loan Guide: How to Get the Best Possible Mortgage," who recommends negotiating fees upfront.
For example, the buyer's real estate agent may charge a transaction coordinator fee or a buyer's commission.
"When selecting your agent to represent you, tell them that you do not wish to pay any fees of any kind for their services or third-party services that they hire to do a part of their job," says Fleming.
Property taxes are not negotiable. "You can pay them once a year or include it into your escrow to pay it with your monthly mortgage," says Cheryl Reed, director of communications at Angie's List, noting a typical homeowner can expect to pay about $1,700 a year in property taxes.
Paying fees to the lender is common. "Loan fees are not really negotiable today, although many lenders reduce their fees and then build that cost into the interest rate," says Fleming, explaining laws prohibit lenders from charging extra fees to some clients and giving deals to others. "But do remember that you can always trade off upfront costs against the interest rate."
New homes often have lots of room for construction upgrades. Expenses can range from basic appliances to state-of-the-art fridges and dishwashers, as well as average carpeting to high-end, designer tiling and carpets.
If a homeowners association governs the home you're buying you'll likely pay HOA fees. Though rates vary, you can expect to pay anywhere from $250 to $1,000 a year. "These dues pay for services that maintain the curb appeal of the community, upkeep for the signage and community mailings," says Reed.
Before you sign the documents to buy the home, make sure the place is safe. Test for mold, as well as dangerous drugs, such as methamphetamine. The meth residue test costs about $50, which is a good investment as decontamination can cost up to $10,000.
Lead is another must-test-for chemical. Homes built before 1978 are more susceptible to lead. "More than 36 million homes in the U.S. have lead paint in them. That's 40 percent of the housing stock," says Reed.
Decor and Maintenance
New homes are typically ready for move-in, but older homes may need some improvements and styling, too. You'll want to budget for expenses including fresh paint, new appliances, sod installation or grass seeding, and new fixtures like lights and electrical switches.