2. Closing Costs

Buyers are often so focused on the purchase price of their home and the initial down payment, it can be all too easy for closing costs to get overlooked. Due at the time the buyer closes on the home, these fees include things like mortgage taxes, lender application fees, attorney’s fees, title insurance, and appraisal fees that typically range from 2-5% of your home’s purchase price.

So, for a $250,000 home, you should expect to pay anywhere between $5,000 to $12,500 in addition to your mortgage payment. Make sure you factor these costs into your budget when deciding what you can afford.

3. Private Mortgage Insurance (PMI)

If your down payment is less than 20% of the home’s price, you may be required by some lenders to take out a private mortgage insurance policy until you have accrued 20% equity in your home. This policy protects the lender in case you default on the loan.

PMI typically amounts to .5% - 1% of the entire loan amount on an annual basis — which could add up to several thousand extra dollars a year.

4. Homeowner’s Insurance

Many first-time buyers often underestimate the cost of homeowner’s insurance. According to insurance.com, the national average annual homeowner’s insurance payment is currently $2,777. However, weather events like tornadoes or floods can drive up premiums, which may raise premiums locally.

5. Utility Costs

If you’re used to apartment living, it’s important to note that the utility costs for a home with a single family footing the bill will be significantly higher. You’ll want to consider electric, gas, water, sewer, cable, telephone and internet.

When shopping for a new home, it can be a good idea to ask the current homeowner what their monthly utilities typically run so that you can get a realistic expectation of what you should expect to pay.

6. Moving Costs

Although it’s a one-time cost, a same-city move averages $1,000, and can

go up from there depending on the size of your house and distance, so make sure you factor it in.

7. Home Maintenance and Repairs

Even if you buy a home that’s move-in ready, it’s important to have a “rainy day” fund ready for when the AC goes bad or you finally need a new roof. Depending on your house’s age, homeowners should plan to save 1 to 4% of your home’s value each year to be able to cover repair and maintenance expenses that will come up.

Home buying might seem like a complicated process, but with the right planning, budgeting and preparation, it can be incredibly rewarding!

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