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Hidden Costs of Buying a Home

Posted by Emma Parker on April 30, 2021

With the spring market ramping up & this seller’s market not budging, I’m watching a lot of my clients become frustrated after seeing the amount of buyers that they’re competing against. While I can’t wipe out the pool of buyers that they’re competing with, I can prepare them with the best knowledge of what the hidden costs of buying a home are, so they are ready for when that offer gets accepted!

The home-buying process can be stressful & emotional! Knowing all of the hidden costs of buying a home up front can help you be as accurate as possible when budgeting. While your mortgage payment, home insurance, and mortgage insurance are included in your monthly payment, there are other up front costs to consider. Here are all of those ~hidden~ costs that you may want to consider when budgeting!

Closing Costs

1) Closing Costs – this is a big one, and one that not many buyers consider when budgeting. These are your closing attorney’s fees, title search & title insurance, recording fees, lender fees, & pre-paid taxes and insurances.

Depending on the property you’re purchasing, these fees can range from $1,000 – $10,000+, but usually for first time home buyers, it’s around $3,000 – $5,000.

There are also ways to decrease these numbers! Asking for closing cost assistance from the sellers right off the bat when you make an offer is one way. You can ask for a certain amount or an “amount up to” for the sellers to cover. The other way is to use part, or all, of your earnest money (the initial deposit you send with your offer) to help decrease the closing costs. Your initial deposit is usually a couple hundred to a couple thousand dollars, so this can help cut down a chunk of your closing costs as well!

Moving Expenses

2) Hiring a Moving Company – Depending on the size of your move, you may or may not want to hire movers. When we moved from our rental to our first home, we used our family and friends as movers. However, that requires planning & time off for most. If I had to do it again, I’d probably hire a small, local moving company. You have a lot more than you’d like to think or admit, so hiring movers can take the stress off. Moving costs vary, depending on the amount of time you need them & the distance you’re moving, but I would budget up to $1000 for this!


3) Inspections – typically, a general home inspection is completed once your offer has been accepted. Depending on the property, you can also have specialty inspections if we see fit. A general home inspection typically costs between $350 – $600 depending on the size of the home. The other specialty inspections typically cost a few hundred dollars each. While most buyers don’t need all of the inspections, budgeting for the general inspection, as well as 1-2 specialty inspections is always a good idea.


4) Downpayment – this is the one that a lot of my newer clients are always surprised about. Forget the 20% down rule that is engrained in everyone’s head!! Typical down payments these days are between 3-5%. Now, that’s not to say you can’t put more down if you’d like. I’m just saying you don’t HAVE TO put 20% down. There are also loan programs that allow you to put 0% down, if you qualify. With that being said, you have options! Your lender will discuss your options with you to figure out what the best choice is for you.

A “Just In Case” Fund

5) Emergency Fund – while I hope that you end up over-budgeting and end up with extra cash in your pocket, sometimes unexpected costs pop up! Maybe your closing date has to be moved and you have to pay another month’s rent or mortgage. Or maybe your new home doesn’t appraise high enough & you have to make up the difference with cash (this can be worked out with the seller too, so don’t stress). Maybe your hot water heater explodes 3 days after purchasing your home, like us, and you have to replace it! Whatever might come your way, being smart with your budget is the best way to prevent surprise stress down the road.

Wrap Up

I hope these points will help you in your future home budgeting & purchase. There are, of course, always other costs such as buying furniture, painting, or home projects. But I think of these hidden costs of buying a home as the costs you may not know you have to pay! Knowing what you’re up against before you even start can be a great deciding factor if you’re ready to take that leap into buying.

While buying a home can be intimidating, it shouldn’t be inhibiting! There is no reason that you should be house poor or spend every last dime of yours buying a home. Be smart & honest with yourself about your finances and you’ll be in your own home before you know it!


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