The process of purchasing a home in Dayton brings joy to both first-time and experienced home buyers alike. Home buyers usually focus on property prices, yet often overlook the impact of various additional expenses on their financial plan. Unforeseen expenses will surprise buyers, if they fail to budget for them properly.

The following blog explains the additional expenses that are often overlooked by Dayton homeowners, helping you prepare adequately for your investment.

1. Closing Costs: The Expenses Before You Get the Keys

Before you complete your home buying process, you must pay a fee. This forms the basis of closing costs. Home purchase closing costs accumulate rapidly and usually amount to 2% to 5% of the house’s total price.

Key Components of Closing Costs:

• Loan Origination Fees - You will be required to pay the lender for their services in processing your mortgage.
• Appraisal Fees - Professional fees paid to experts who evaluate home values form part of the closing costs.
• Title Insurance – With this insurance you are protected against future disagreements, in terms of homeownership.
• Attorney Fees - These cover the review of contracts and agreements by a lawyer.
• Recording Fees - The official documentation process for property transfer includes additional fees.

How to Prepare

Before finalizing the agreement, you should request that your lender provide a closing disclosure (CD). The document provides comprehensive details about all closing costs, enabling you to prepare effectively for these expenses.

2. Property Taxes: An Ongoing Cost That Adds Up

Dayton property taxes are based on the assessed value of your house. The payment of these taxes occurs once or twice a year, through your mortgage escrow system.

What to Consider:

• Property tax rates are based on assessments made by local government authorities.
• The increase in property taxes over time will directly affect your monthly mortgage payment.
• Veterans, along with senior citizens and first-time home buyers, are eligible for property tax exemptions.

How to Prepare:

A prospective home buyer must review the Montgomery County Auditor’s website to access Dayton’s current property tax rates, before making a purchase.

3. Homeowners Insurance: Protecting Your Investment

Homeowners insurance is a requirement of most mortgage lenders, to protect homes against fire damage, theft and natural disasters.

Factors Affecting Insurance Costs:

• Location - The premiums that you pay rise when your property is situated in areas prone to flooding or high crime rates.
• Home Value – The insurance cost is relevant to the value of your home (that is, you pay more if your house has a higher value, and vice versa).
• Coverage Level - Basic insurance coverage offers limited protection, so consider additional riders for comprehensive protection.

How to Prepare:

Obtain several insurance policy quotes from different companies. Contact your insurance provider about receiving reduced rates, by combining an auto policy with life insurance.

4. Private Mortgage Insurance (PMI): An Extra Cost for Low Down Payments

A down payment amount below 20% of the purchase price may require your lender to request Private Mortgage Insurance (PMI). PMI exists to safeguard lenders, rather than homeowners, during default situations.

How PMI Affects Your Budget:

• The annual cost ranges between 0.3% and 1.5% of the total initial loan value.
• The insurance premium will be included in your monthly mortgage, until your home equity reaches 20%.

How to Prepare:

• Save toward a larger down payment amount, to prevent PMI costs.
• You can request a new appraisal when your property value increases, allowing you to terminate PMI coverage early.

5. Home Maintenance and Repairs: Unexpected Expenses

The duty to maintain one’s property applies exclusively to homeowners, not to renters. Most first-time home buyers fail to predict the expenses required to maintain their property accurately.

• HVAC Servicing - Property owners need to perform regular maintenance, through inspections on their heating and cooling systems, and undertake necessary repairs.
• Roof Maintenance - The process of repairing leaks and changing worn shingles is one of the most important tasks, to protect a home’s integrity.

How to Prepare:

• Every year allocate 1% to 3% of your home’s value for maintaining and repairing your property.
• A home warranty policy should be considered, to protect central household systems and appliances.

6. Utilities and Monthly Expenses: More Than Just a Mortgage Payment

Homeowners must pay utility bills, as well as service fees, which renters typically do not incur.

Standard Utility Costs in Dayton:

• Electricity and Gas - The costs of electricity and gas depend on the house’s dimensions and energy saving capabilities.
• Water and Sewer - These are paid to local utility providers.
• Trash Collection - City services often include fees as part of their provided services.
• Homeowners Association (HOA) Fees - If applicable, these fees cover community maintenance.

How to Prepare:

• Request utility cost information from the seller, to calculate your monthly bill amounts.
• Prioritize research on energy saving improvements, to reduce future energy costs.

7. Moving Costs: Getting Settled Comes at a Price

The expenses associated with moving become substantial, whether you choose professional assistance or do it independently.

Potential Expenses:

• Moving Truck Rental - The price of moving services depends on both the distance of the move and the size of the truck.
• Packing Supplies - The total cost of boxes, protective materials and tape can become substantial.
• Storage Fees - You may need to store your belongings temporarily, if your move-in date gets postponed.
• Utility Setup Fees - New service connection setups require service providers to collect a deposit from their customers.

How to Prepare:

• Consider comparing moving company rates before booking your services, to take advantage of discounts.
• People with limited funds should explore self-moving alternatives.

Conclusion

The hidden costs of buying a home in Dayton can add thousands of dollars to your initial and ongoing expenses. By understanding these costs and budgeting accordingly, you can make a smarter financial decision and enjoy your new home, with fewer unexpected financial burdens.

To learn more about these fees and receive guidance on navigating the home buying process as a first-time home buyer in Dayton, contact Jill Team now!