Hidden Costs You Need To Know When Buying A Home

Buying a home in today’s real estate market can feel overwhelming. With high prices and limited inventory, you may find yourself needing to borrow more than you expected for your down payment. Before you start shopping for loans and budgeting your monthly expenses, you also need to know the potential hidden costs associated with buying a new home. 

Some of the most common hidden fees first-time buyers aren’t aware of when buying a home include closing costs, transfer and property taxes, legal fees, and unexpected insurance needs. Replacing appliances, buying new furniture, preventative pest control, and home inspections can all add up quickly. Landscaping needs, HOA fees, trash fees, and unexpected utilities can also contribute to your monthly expenses.

If you’re a first-time home buyer on the hunt for your dream home, you may not be aware that the price of the property isn’t the only cost you need to cover. Before you make a bid, know all the costs associated with buying a home. Keep reading to learn the most common hidden fees associated with purchasing and moving into a new home.

14 Hidden Fees Associated With Buying A Home

1. Closing Costs

One of the biggest hidden fees associated with buying a home is closing costs, a collection of fees associated with buying a home. Everything from credit reports to lender fees is grouped into closing costs. Generally, that can range from 2 to 4 percent of your home's total cost, which can be $10,000 or more in many cases.

2. Moving

One expense that everyone must factor in is moving costs. Even if the new home is nearby, it will cost time and money to move from one home to another, plus you may have to pay for multiple properties or storage for at least one month as you transition from one place to another.

Before you bid on a home, ensure you understand all your moving logistics. Budget for movers, truck rentals, and storage, as they pertain to your specific situation. If you’re moving across a state or across the country, your moving costs can add up to thousands of dollars.

3. The Appraisal

Appraisal fees are not part of closing costs, but they are another necessary fee associated with buying a home. An appraisal fee goes directly to the professional who is providing the service. If you are applying for a loan, you will almost certainly have to pay this fee.

Lenders want to ensure the home you are buying is worth the price you are paying. Appraisal fees vary based on a home's size and location, ranging from $200 to over $1,000.

4. Unexpected Insurance

Most prospective buyers are aware they must acquire homeowners' insurance when purchasing a home. What they might not know, is the supplemental types of insurance that may be required based on the specific home and how they are paying for it.

For instance, depending on your credit history and the size of your loan, you might have to pay mortgage insurance. If you live near a body of water or a low-lying area, you may have to get mandatory flood insurance. The same goes for moving into hurricane-prone regions. Before you bid on a house, make sure you know what type of insurance it requires and how much it will add to your monthly expenses.

5. Transfer And Property Taxes

There are several types of taxes associated with home ownership that you might not be aware of and new homeowners can be shocked at how high these taxes are in some regions. 

6. Unforeseen Utilities

While it’s a no-brainer that you’ll have to pay your own utilities, there’s a chance you might not know exactly how many you'll need to pay for. You likely know that as an owner you must pay electricity and all energy costs, but you may not be aware of water costs, green energy surcharges, and minimum-use fees. Ensure you know your municipality’s utility companies and understand the fees involved before deciding to move there. 

7. Potential HOA Fees

HOA fees can completely upend your monthly budget. While there are many potential benefits to living in an HOA, there are also several questions you need to ask before moving into one. For example, you need to understand the monthly fees. Not only must you budget into your expenses for it, but you should also find out if and when these fees might increase.

8. Large Appliance Replacement

As you hunt for the perfect home, make sure you note which appliances are new and which need to be replaced. For example, if you aren’t paying close attention, you might miss that the house has an old washer and dryer. Replacing them can cost thousands of dollars right off the bat. Check which appliances have warranties, and research how long each is likely to last. Doing this work can help you budget and prepare for the cost of these pricey home purchases.

9. New Furniture And Decor

Decorating a home is fun, but paying for all the new furniture and decorations is another story. If you’re moving into a home that requires a lot of furniture and decor, including curtains, paint, and other essentials, then you need to factor in those costs. Even if a home seems turn-key ready, it doesn’t mean you won't have to spend at least $1,000 to make it feel like your home. Build an online shopping cart of all the items you know you’ll need to get a rough estimate of your initial budget.

10. HVAC Inspection And Maintenance 

If the home has an HVAC system, have it inspected before you move in and maintained afterward. HVAC systems often require immediate service once you move in, especially if a home sits idle on the market for a year or longer. HVAC professionals can be pricey, so ensure you factor in maintenance and potential repairs when calculating your home's cost.

11. Landscaping

If you’re moving into a home with a sizable yard, it’s important to remember that lawns don’t mow themselves, and gardens require time and money. You are responsible for lawn care the moment the property is transferred under your name. You are responible for the lawn being mowed regularly, even if you aren’t yet iving in the home. If the landscaping is bare and requires significant work, budget enough to begin the project and complete it promptly.

12. Trash Removal

While many municipalities include trash pickup as a part of the local taxes, some areas charge fees that might be spread out into monthly installments. However, in some instances, they may require a hefty up-front cost for trash pickup. Ensure you’re aware of trash and recycling pickup services before bidding on a home.

13. Preventive Pest Control

One of the best ways to keep pests out of your new home is to use preventive pest control. It’s a very good idea to have your home treated before you move in to help remove potential infestations and keep your home protected against for many months to come. Professional pest control services aren’t cheap. Call local exterminators in your area to get quotes, and factor these costs into your total home price.

14. Home Security

Don't forget about a security system. If the home lacks home security, then you’ll need to budget for it. As well, you may want to replace all locks, which can cost several hundred dollars, depending on the number of exterior doors.

Wrapping Up Hidden Costs To Know About When Buying A Home

Buying a home is more expensive than ever, and that’s even before you consider all the potential hidden fees associated with buying a home. Before you sign on the dotted line, it's smart to understand what these extra costs are. Consider the closing costs, insurance requirements and property taxes, as well as potential unexpected costs for utilities, landscaping, HOA, and security. Take the time to budget for furniture, decor, and expensive new home appliances that you’ll need as soon as you move in.

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