As a first-time homeowner, you might want to move into your new home right away. Quite understandable! After all, you’ve worked so hard and waited so long to finally achieve your dream.
However, in the heat of your excitement, you might overlook a few things that might cost you in the long run. Here are five of the most common expenses that first-time homebuyers usually don’t think about… until they see the bill!
When buying a new home, sometimes you need to pay a reservation fee first. Not to be confused with a security deposit, a reservation fee expresses your intent and offer to purchase the property and kick starts the process of your home ownership. While it already forms part of the downpayment for the property, the actual cost of the reservation fee varies from one real estate developer to the next.
As such, make sure you read the written agreement that sets out the terms of your reservation fee. Depending on the reservation agreement, you may need to pay the reservation fee once an offer is made, as the reservation for the property may only be good for a period of 28 to 30 days. If the buyer fails to sign the contract within this time period, or chooses to cancel the purchase, the reservation fee is already non-refundable. However, depending on the agreement, the reservation fee may be transferable if you’re going to buy another unit or property from the same developer.
Real property tax is almost a guaranteed perpetuity payment made at the homeowner’s expense—and you don’t have much of a say in how much it will be.
The percentage varies depending on multiple factors, so make sure that you have an idea of how much your real property taxes will be before any final decisions with regards to your new home.
Real property tax, which is paid yearly, often varies depending on the value of the property as evaluated by an authorized assessor. The amount may also vary from place to place, depending on the region or municipality where the home is located. (Highly urbanized areas in larger cities tend to have higher property taxes than rural areas.)
Additionally, there are other expenses attached to the processing of real property taxes, such as cost for a Documentary Stamp and for Transfer and Registration Tax, both of which can amount to 1.5% of the selling price of the property.
By all accounts, home insurance is not an unexpected expense. After all, banks and mortgage companies often require it before approving your home loan, with the insurance premiums already factored in the mortgage payments. However, insurance premiums do increase annually, depending on the coverage and the changing value of your property.
Even if home insurance is required, you might want to consider other kinds of insurance as well.
Do you live near bodies of water or a flood-prone area? You might want to consider flood insurance. Is your neighborhood prone to fires, electrical problems, and other similar hazards? You might want to consider fire insurance. You never know when disaster will strike, so it’s better to be covered for any possible worst-case scenario.
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As the name suggests, move-in fees are the total amount a home buyer must pay before they can officially move into the property. Not to be confused with security deposits, move-in fees are non-refundable and are usually computed based on several factors.
Depending on the property, move-in fees may already include costs for water, electricity, landscaping, and even association dues.
Association Fees and other Dues
If your new home is in a subdivision or a planned development, chances are it will be part of a homeowner’s association (HOA). Membership to these associations is often required, and they also have rules that homeowners must follow. Depending on the association, fees and other dues are usually paid monthly or annually.
These fees, however, are not for nothing as they benefit the neighborhood. They usually go to services such as security, landscaping, repairs, and garbage collection, among other upkeep for the neighborhood. As such, depending on the extent of the upkeep and repairs needed in the neighborhood, association fees and other dues may also increase without prior notice.
All this aside, is buying your own home still on your radar? Visit the Avida Land website and take a look at the house and condominium developments currently on offer in prime locations across the country. Starting the home-owning journey through Avida is easy, convenient and safe, thanks to contactless solutions like our Avida 360 Showroom.