Don’t Get Blindsided by These 12 Hidden Costs of Buying a Home
Written by
Laura Beck
Edited by
Gary Dudak
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Homeownership is a rite of passage of American life, but the hidden costs of buying can add up. When people buy a house, they often focus on the mortgage rates and the big price tag. But there are lots of other costs that can surprise new homeowners.
GOBankingRates did some digging to figure out all of these sneaky fees. So, if you’re about to buy a home, make sure to consult this list first. Here are 12 of these hidden expenses you should know about before you buy a house.
Property Taxes
Even after you buy a house, you have to pay taxes on it every year. The amount depends on where your house is and how much you bought it for. Sometimes, these taxes can go up after you buy the house, so it’s important to be ready for that.
Closing Costs
When you finish buying a house, there are extra fees you have to pay. These are called closing costs. They include things like paying the bank for your loan and paying for insurance on the house. Usually, closing costs are about 2% to 5% of the price of the house.
Homeowners Insurance
Just like you need insurance for a car, you need insurance for a house. This protects you if something bad happens, like a fire or a storm. The bank that gives you money to buy the house will probably make you get this insurance.
Homeowners Association (HOA) Fees
Lots of homes, condos and apartments now have homeowners association fees — and they can be pricey. According to various estimates, HOA fees average $170 per month. These fees can pay for things like taking care of parks or swimming pools in the neighborhood. Make sure you know exactly what they are before you buy a house.
Home Improvements and Repairs
Houses often need fixing up. You might want to paint the walls or fix an old bathroom. It’s a good idea to save some extra money for these kinds of projects.
Home Warranty
This is like a special kind of insurance that covers things in your house that might break, like the refrigerator or the air conditioner. It’s not required, but it can be helpful.
Private Mortgage Insurance
If you don’t have a lot of money for a down payment, you might have to pay extra insurance on your loan. This is to protect the bank in case you can’t pay your loan.
Private mortgage insurance is required if your down payment is less than 20%. The insurance is tacked onto your mortgage.
Of course, you can avoid this cost by putting down more than 20% when you buy a home.Â
Moving Costs
Don’t forget that you’ll need to pay to move all your stuff to the new house. If you hire movers, this can cost quite a bit of money.
New Furniture and Appliances
You might need to buy new furniture for your new house, especially if it’s bigger than where you lived before. Sometimes, houses don’t come with appliances like a refrigerator or a washing machine, so you might need to buy those too.
Utility Setup
When you move into a new house, you have to set up things like electricity, water and internet. Sometimes you have to pay fees to start these services.
Outdoor Maintenance
If your new house has a yard, you’ll need to take care of it. This might mean buying a lawnmower or paying someone to mow the lawn for you.
Emergency Fund
It’s always a good idea to have some extra money saved up for unexpected problems. Houses can sometimes have surprise issues that need to be fixed right away.Â
According to most money experts, a fully funded emergency fund should be able to cover 3Â-6 months of expenses.
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