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15 Hidden Expenses After Buying a Home

By Thomas O'Shaughnessy | November 2, 2022

Buying a home is likely the largest purchase you’ll ever make. In today’s competitive housing market, even buyers who saved a hefty down payment might end up paying more for their home than they planned. It’s easy to bust your budget when it comes to a home’s sale price, but many homeowners are surprised by the expenses they'll need at or after closing. Before you sign on the dotted line, consider these 15 hidden expenses after buying a home.

Unexpected Expenses at Closing

Some of these expenses are rolled into your closing fees, while others are not. It’s important to get a copy of your closing documents before you sign so you can prepare for what’s ahead, especially if it requires additional cash. 

1. Homeowners Association (HOA) Fees

Many condo and townhome communities charge homeowners association fees. These fees cover community amenities, such as a clubhouse or pool, as well as snow removal, yard maintenance, and other services. The amount you'll pay is directly tied to what services the HOA provides and your location.

2. Private Mortgage Insurance (PMI) 

If the final sale price exceeds your budget and you can't make a 20% down payment as planned, you may be required to add private mortgage insurance to your closing costs. This private insurance protects the bank against default when homeowners put down less than 20% on their home.

The average down payment on a house is 6% so this applies to many home buyers.

Some companies let you pay PMI in one lump sum, but most homeowners opt to roll it into their monthly mortgage payment. The good news is, once you have 20% equity in your home, you no longer have to pay PMI. 

3. Property Taxes

Property taxes are another expense rolled into closing. The average property tax rate is 1.1% of a home’s assessed value, but this varies across the U.S. The cost is typically prorated and won’t include the entire amount owed annually. Some homeowners choose to have property taxes added to their monthly mortgage payment, while others elect to receive a bill annually. If you buy a home with cash, you’ll pay annually.

4. Realtor Commission

Typically, the seller pays the Realtor who finds your home, negotiates the best price, and sits next to you at closing. In some cases, the buyer may be on the hook for Realtor commission, and you’ll see that number as a line item on your closing documents. However, it's possible to save on Realtor fees by working with a discount agent

Expenses After Closing

Many expenses after closing can be gradually addressed, but others are required before you spend the first night in your new home. 

1. Utilities 

Utility costs are a fact of life for renters and homeowners alike, but it can be shocking if you’ve rented an apartment where utilities were included. You’ll now be responsible for:

  • Cable TV
  • Internet
  • Trash
  • Sewer
  • Water
  • Electric
  • Gas

Many utility companies charge a substantial deposit for first-time homeowners with poor or little credit. This is cash directly out of pocket.

2. New Furniture

Chances are you’ll have at least some furniture to set up your new home, but if you’re upgrading and adding square footage, you’ll likely need more.

3. Decorations

A house is just a house until you make it a home. You may have some decorations from your previous residence, but most new homeowners want to make changes when they move.

4. New Appliances

If the kitchen lacks updated appliances or the avocado-colored fridge isn’t working for your design aesthetic, you’ll need to budget for new appliances. You might choose to add a warranty to each appliance, which can save you money in the long run but is expensive upfront.

5. Home Warranty

Unlike homeowners insurance, which protects against weather damage or other accidents, a home warranty protects a home's internal components, such as its appliances, plumbing, and heating and cooling systems. This is an annual expense, but some companies will break it into monthly payments. The good news is that it can replace individual appliance warranties.

6. Maintenance Supplies

That lush green lawn won’t maintain itself. Renters are sometimes surprised by the number of tools required to maintain a  home. These can include lawn care equipment and snow removal tools, but that’s not all. You’ll also need indoor supplies, such as hand tools, a vacuum, and cleaning products

7. Home Repairs 

If you’ve purchased a fixer-upper, chances are good you’ve already budgeted for repairs. But if your home inspection revealed additional problems that need tending, you’ll have to fix those when you move in. The tasks might be as small as fixing a leaky faucet or as big as replacing damaged flooring. You won’t know what’s underneath the floor or behind the wall you tear open, so be prepared for a bigger, more expensive project.  

8. Upgrades 

If the backyard is begging for a pool or a large deck for long summer nights outside with family and friends, that’s another expense that you might have forgotten in the excitement of buying a home.

9. Window Treatments 

Some homes come with window treatments, such as shades, valances, blinds, and interior curtains. If yours does not, or if the current ones aren’t your style, this is a big expense. Window treatment prices range from $144 to $1,529, with the national average being $833, according to HomeAdvisor. 

10. Security System

A security system provides peace of mind no matter where you live. Whether you choose professional installation or buy a DIY kit online, this is still something to budget for.

11. Moving Large Items

If your move takes you across the country or even across the state, you might need to move large items, such as cars or outdoor structures, separately from your belongings. Car shipping companies can help move vehicles, but for outbuildings or big machinery, you’ll need to find specialized movers that can get the needed permits.

How to Plan for the Unexpected

These expenses are unexpected for a reason, but it is possible to plan ahead. Consider these strategies for managing costs after closing:

  • If you receive a home buyer rebate, use that money to pay for additional expenses.
  • Use deposits returned from an apartment complex or rental home for other expenses.
  • Make repairs and purchase new furniture in increments if you can't afford a lump sum.
  • Consider going without cable TV until you’re settled financially.
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