When you’re buying a new home, you don’t just need money for the down payment and moving van. You’ll also need enough extra money to cover these 10 hidden costs.
Closing fees
This includes all the “paperwork fees” required to close the loan—like title services, title insurance, credit reports, and processing fees. These are completely normal (and can run anywhere from several hundred to several thousand dollars).
Appraisal
Your mortgage lender will probably ask you to pay for an appraisal to make sure that the house is worth what you paid for it. The national average for a home appraisal is $327, according to HomeAdvisor.com.
Property taxes
You will be required to pay taxes each year on your home, which many lenders roll into your monthly mortgage payment.
PMI
If your initial down payment is less than 20% of the home’s price, expect to pay private mortgage insurance (PMI) along with your regular monthly mortgage payment.
House insurance
Remember that you’ll also need a homeowner’s insurance policy to cover your house (and personal belongings) in the event of fire, flood, theft, or weather damage.
Escrow
Escrow accounts can be confusing—but they are typically required by lenders, especially if you make a down payment of less than 20%. An escrow account is kind of like a savings account set up by the mortgage company to pay ongoing expenses, like PMI and property taxes.
Inspection
According to HomeAdvisor.com, the average home inspection in the U.S. costs around $323. Budget more if you have a larger home or if you plan to do optional inspections for mold, termites, or radon gas.
HOA dues
If you buy a house in a neighborhood that is a member of a homeowners association (HOA), then you will be required to pay their monthly (or yearly) dues. Depending on the services provided by the HOA, this can range from $10/month to $300/month (or more).
Repairs
Most homeowners end up making at least a few repairs to their new home (even if it’s brand new). Budget a few hundred dollars to cover any move-in emergencies that pop up.
Utility deposits
Finally, don’t forget that you’ll need to transfer utilities—or start services with a new company, which may require a deposit. You may also need to pay installation fees for services like cable TV or wi-fi.
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