As every day passes we inch closer and closer to bike rides at Cape Henlopen State park, evening strolls to get ice cream at Kings and the smells and sounds of Rehoboth boardwalk. It is with same anticipation that I know there will be a time soon where I find myself annoyed at mosquitoes getting drunk at the Nitan Tavern and Saloon. We do what we can to prepare, we cover ourselves in all kinds of repugnantly smelling chemicals but still they find the one landing strip free and clear from protection.
It is this same sense of irritation that I feel toward unexpected fees, especially hidden fees. You try your best to prepare but some how you can’t avoid them. My wife was with a certain cell phone carrier (that will remain nameless) sometime ago. She was on an unlimited text plan and had all the minutes her heart could ever want to talk to another human being. We got all the assurances from the store that our bill would include all XYZ. Fast forward a few months and I am staring at a cellphone bill that is much larger than expected. So I call up customer service to get an explanation and the representative tells me that the phone had been pre-loaded with apps that they were charging me for each month. To make things worse anytime the app was opened (which my kids did both purposely and accidently) I was charged an extra fee. To cancel this feature you would need to know to call the service line to have them removed from your phone! Man was I hot.
I share this because there are always unexpected fees that we simply don’t think about when going through the excitement of buying a new home. You think you are aware of all the expenses and still you end up paying for something that was never clearly explained or you just simply did not know about. So to help with limiting your annoyance I am sharing the advice I give to my clients to help them expect the unexpected:
1) Financing fees-There are many fees associated with securing a mortgage. Attorney fees, application fees, appraisal fees not to mention that some mortgage products switch the burden of responsibility between buyers and sellers. Although the new federal “know before you owe” guidelines will help to provide a clearer picture, I still encourage you to talk with your lender to make sure you identify who is paying for what. Don’t get stuck with a bill for a water inspection because you didn’t ask!
2) Pre-Paid expenses-Another doozy is realizing that you have to pre-pay for homeowners insurance and property taxes for the upcoming quarter. This can take the form of an upfront escrow payment but avoid the shock at the settlement table by talking with your lender. Also know that you may have to credit the seller for expenses that they have already paid for such as HOA fees or utilities at the property like a propane or oil tank.
3) Moving Costs-We think we are going to be able to do this relatively cheap but the small costs soon add up. Packing tape, boxes, rental vans, feeding your volunteers, storage containers. The typical in-state cost of moving can be as high as $1200 where crossing state lines can cost you as much as $5000. Don’t forget to include the cost of a new drivers license and vehicle registration in your new state of residence!
4) Furniture and Home Upgrades- Whether you are expanding or downsizing you will need to think about furniture. You are either buying more to fill the extra space or possibly placing an ad for someone to take it off your hands. There are also costs for the immediate changes you want to make to the home so it is more comfortable for your family. This can be as expensive as kitchen remodel or as cheap as a can of paint but a good estimate to set aside is 10% of the purchase price.
So these are just a few things to look out for but I encourage you to be your own advocate. Ask the questions, understand your responsibilities and avoid having your money sucked out of you.
Written by Nitan Soni