The Very Unexpected Costs Of Buying A House

September 24, 2019  |  
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the buying a house process

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Buying a house is very, very expensive. I specifically use the words “buying a house” to indicate that it is an active, ongoing process. You don’t just see a house you like, say “We’ll take it,” hand over a check, and—bam—it’s done. From the moment you start looking for a home to the moment you’re in your new home, months could pass. Over a year could pass. And there are a lot of steps involved, both in searching for a home and making an offer that is accepted, each of which cost money. Even then, don’t be fooled by the little mortgage calculators that try to tell you you’ll only be spending $1,100 a month to own this home. That’s far from the truth. There are a lot of hidden costs to buying and owning a home. If you aren’t prepared for them (aka don’t have that money in the bank), buying a house could financially destroy you, rather than help you.

the buying a house process

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Lost income while searching

It may not seem like a big deal at first, but once you start truly actively looking for a home, it can take up a lot of your time. When you get serious about it, you may take several hours a week driving around the city to do walk-throughs of properties. Depending on the line of work you’re in, that can mean substantial lost income for you.

the buying a house process

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Loan application fees

Remember that you have to pay money in order to ask for money. Processing fees for loan applications can cost anywhere from a couple hundred dollars to over a thousand—that’s because the fee is usually a percentage of the money for which you’re asking. It will usually be roughly one to eight percent.

the buying a house process

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Appraisal fees

Your lender will want to verify the value of your home, keeping in mind that if you fail to pay your mortgage, they then own that property. In fact, they always own it, until you’ve paid it off. You’ll have to pay for the appraisal, which can cost a few hundred dollars.

the buying a house process

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HOA fees

Homeowners association fees will sneak up on you. Sometimes, they’re as high as 25 percent of your monthly mortgage payment. So you may pay $500 a month in HOA fees, on top of a $2,000 monthly mortgage payment.

the buying a house process

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Property taxes

Property taxes are another thing to consider, that you just weren’t plagued with as a renter. They will range by state, and even by city and sometimes more specifically borough. The tax foundation offers this tool to calculate what your property taxes would be.

the buying a house process

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Homeowner’s insurance

Maybe you didn’t buy renter’s insurance (though you probably should have), but you can’t get away with not buying homeowner’s insurance. The average annual premium varies per state, but hovers around $1,000 per year.

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Recording fees

The deed of the home will have to change from the previous seller’s name to yours, and you’ll have to register that change with the country clerk who will charge you anywhere from $5 to $20 a page in recording fees.

the buying a house process

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Home inspections

If you are interested in a home and have put in an offer, you’ll need to do a home inspection to check for things like termites and structural issues. This will cost you a few hundred dollars—just for a basic inspection. If a more in-depth one is required, it may cost you more.

the buying a house process

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Home inspections gone wrong

Now consider this: if the inspection does find something that makes the house no longer appealing to you, you’ll pull out. You just paid that inspection fee—well, not for nothing, but for a home that won’t be yours. You may do this several times on several houses.

the buying a house process

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Decorating

Many individuals don’t put much thought or money into decorating their rented spaces, thinking, “I won’t be here long.” But when you move into your house, you’ll want to finally make it a home, and properly decorating can be expensive. Between every lamp, rug, light fixture, photo frame, and bookshelf, it can really add up.

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Outdoor maintenance

If you buy a condo, this may be mostly handled for you. But if you buy a stand-alone, single-family house, you’ll be responsible for all of the work that keeps the outside of your home looking nice. Think pressure washing, landscaping, trash removal, and more.

the buying a house process

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Indoor maintenance

You’ll be responsible for all indoor maintenance, too. If paint cracks or a faucet leaks, that’s on you to repair.

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Utility increases

If the home you buy is larger than the place you rented, your utility bills may increase substantially. You’ll need a better Internet plan, so that Wi-Fi reaches every corner of your home. Your water and heating bills will go up, too.

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Loss of income on DIY projects

When you do decide to handle repairs on your own, that isn’t free. Not only will the materials cost money, but your time costs money. Again, depending on the nature of your work, you may spend unpaid time fixing something at home rather than making money at your job.

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Notary fees

There will be a lot of notary fees involved. So, so many. Standard fees range from $2 to $20 per signature, but mortgage-related notarizations can be more expensive.

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