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10 Unexpected Costs of Buying a Home

July 12, 2021

10 Unexpected Costs of Buying a Home

Now that you’re ready to buy a home, you need to be prepared for all the unexpected costs that come with it. While your own research and your real estate agent will guide you through the process, things pop up all the time when making a huge purchase like a home or a car.

Let’s walk through ten unexpected costs of buying a home and how you can prepare for each one.

Unexpected Costs of a Buying a Home to Prepare For

Mortgage Insurance

If you opt not to put up to 20% down to buy your home, you’ll be required to pay for mortgage insurance. Mortgage insurance, or PMI, covers the risk of a lower down payment or no down payment on a home for lenders. This will be an added cost looped into your total mortgage cost. This is one of the unexpected costs of buying a home many buyers fail to realize until they get the final monthly mortgage total.

Homeowners Insurance

Owning a home is a huge financial commitment. Investing in homeowner’s insurance to cover issues that arise is essential to keep your house in tip-top shape. Homeowner’s insurance is meant to cover expenses in the event of something catastrophic happening to your home, like a fire, flood, etc. You can add coverage for expensive items (think: jewelry) or specific weather events (such as hail.) Liability coverage added to your homeowner’s insurance will also cover if someone is injured on your property.

Property Taxes

If you own a home, you owe property taxes. These are typically billed yearly by your county government, dependent on the price of your home. It should rise year-over-year as your home’s value increases. This cost will often be part of your total mortgage payment. It will add a few hundred dollars if you don’t research property tax values where you choose to buy. Don’t be surprised by it.

Emergency Costs

You should always have some savings to cover emergencies after you close on your home. No matter how good the walkthrough or inspection is, you never know what might happen. You could move in, and the day after you move in, a storm comes through, and the next thing you know, a tree landed on your roof.

Have three to six months of your mortgage cost saved up for home emergencies like this. While your homeowner’s insurance will cover much of it, you may still need to pay a deductible or put up some of the costs upfront to get an issue taken care of immediately while waiting for your insurance company to act.

Utilities

Utility costs vary across the country and during different seasons. If you’re buying a home for the first time, you might have sticker shock the first time you get an electric, gas, or water bill, especially if you’re moving from a smaller place to a much larger one. Homes often cost more for monthly utilities than what you’re used to. Plan accordingly to avoid under-budgeting your total home costs post-moving in.

Trash

This is another added monthly cost for homeowners. Many aren’t used to paying until they buy a home. If you lived in an apartment complex or condo building, you might drop the trash off at a dumpster or dropped it down a chute, never to see it again. When you own a home, you often pay a private company to pick up your trash and recycling. You rent bins to put your trash in. Then they pick it up once a week from your driveway. Ensure how trash works in your area to sign up for service before you move in.

Lawn and Tree Care

If your home has a lawn, a garden, or trees, you’ll need to maintain them. Whether you hire a professional or do it yourself, you’ll have added monthly costs for maintaining your home. Take the time to understand exactly what you need to do to take care of the lawn and trees – if it’s beyond what you can do yourself, hire a professional. It may be an added cost, but it’ll be worth it.

Leaf and Snow Removal

Depending on where you buy a home and how big your property is, you may need to invest in leaf and/or snow removal. While you can do it yourself, it may be worth it to consider hiring someone to do it for you. If you go that route, make sure to plan and choose a reputable company or service to do it.

Pest Control

When you don’t own a home, your landlord or property management company handles pest control issues. It’s often something you don’t even notice because they’re taking care of it. When you own a home, that falls on you. Get an estimate from a pest control company on the monthly costs for taking care of those creepy crawlers. Add this to your monthly or quarterly costs. Staying on top of pests like termites is essential upkeep.

Furniture

You know you need new furniture in your new home, but most new homeowners fail to realize how expensive furnishing a home is. Some think they need to do it all at once; others buy the necessities. No matter what path you decide to go down, make sure to over-estimate your furniture costs when buying a home. This is one area it gets expensive very quickly without your realizing it. Be safe, not sorry about this unexpected cost.

These aren’t all the unexpected costs of buying a home, but they give you a good idea of where to start planning. There is a lot that goes into home buying. Be prepared for what the process throws your way.

Work with a trusted real estate agent or company. Ask questions. Take the time to understand how the process works and what expenses to expect. You’ll be prepared for anything home buying throws your way – you’ll be ready for those unexpected costs that pop up when buying a house.

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