Buying your first home is an exciting adventure. Though you may be aware of common homebuying costs, like your mortgage and homeowners insurance, there are several hidden costs of buying a home that you might not be aware of. The more you learn about these costs in advance, the better you’ll be prepared for all of the expenses you could face during the homebuying process.
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As you plan to buy a house, add these hidden costs of buying a home to your budget.
Home Appraisal
Most buyers are responsible for paying for a home appraisal, which gives your mortgage lender a chance to review the home’s fair market value and ensure the mortgage amount is appropriate. You may be responsible for paying the fee upfront, though some lenders may choose to wrap it into your closing costs. An appraisal often costs between $350 and $500, though fees can be higher for more complicated properties or multi-family homes.
Home Inspection
It’s a good idea to get a home inspection performed, which can help to identify potentially expensive and complicated issues, like foundation problems. Depending on your mortgage type, a lender may require you to have a home inspection done.
As a buyer, you’ll be responsible for the home inspection costs. Inspections start around $500 for smaller homes, but costs can increase for larger properties. If you decide to add on specialty inspections, like a roof inspection, you’ll pay an additional fee for those services.
Property and School Taxes
As a first-time homebuyer, it’s easy to initially overlook what you’ll pay in property and school taxes each year. Your property tax rates are usually set by your town, and those rates may increase depending on the town’s funding needs and major projects. Towns also implement school taxes, which may be included in your property taxes or taxed separately.
You can wrap your taxes into your mortgage, paying on them monthly. This may make it easier to pay your taxes since you won’t be facing large quarterly bills. Make sure that you’re familiar with the town’s property and school tax rates since these expenses are a major part of your recurring homeownership costs.
Closing Costs
Before the pandemic, buyers were often able to request that sellers pay part or all of the closing costs. But since the housing market became so hot during the pandemic, it’s rare for sellers to cover closing costs. Closing costs are typically between 3% and 6% of your mortgage value, and they often include expenses like attorney fees, title fees, recording fees, home insurance, and more.
Moving Expenses
Don’t forget to factor in your moving expenses, too. Hiring a professional mover can quickly get expensive, especially if you need a large truck or multiple trucks. You can save on moving costs by doing some of the moving yourself, which will cut down on the number of hours a mover will bill you.
While there are many hidden costs of buying a home, preparing for those costs can help you to more easily pay for them.
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Paige Cerulli Paige Cerulli is a freelance content writer and journalist who specializes in personal finance topics. She graduated from Westfield State University and brings more than a decade of professional writing experience to the ConsumerCoverage team. Paige’s work has appeared in outlets including USA Today, Business Insider, and more.
