What Other Expenses Come With Buying a House?

Purchasing a home involves more than just the advertised sale price. Homebuyers often focus on the down payment and mortgage, overlooking a range of additional expenses. Understanding these costs is essential for accurate budgeting and financial preparedness. Factoring in these expenditures can prevent surprises and help buyers make informed decisions.

Expenses Before and At Closing

Significant expenses arise from the point a purchase offer is accepted until the closing day. These costs, known as closing costs, typically range from 2% to 5% of the total loan amount, varying by location and loan type. For a $200,000 mortgage, this could mean an additional $4,000 to $10,000.

Loan-Related Fees

Lenders charge various fees for processing and securing the mortgage. An origination fee, typically 0.5% to 1% of the loan amount, covers administrative costs and may be higher for borrowers with lower credit scores. An underwriting fee covers evaluating the loan application and borrower’s creditworthiness.

An appraisal fee is paid for a professional assessment of the home’s market value, required by lenders to ensure the property’s value supports the loan amount. This typically costs $314 to $423, but can be higher for larger or more complex properties, or for government-backed loans. A credit report fee covers pulling your credit history, usually a nominal amount.

Discount points are an optional fee paid upfront to reduce the mortgage interest rate. One point usually costs 1% of the loan amount and can lower monthly payments over the loan’s life. Mortgage insurance premiums (MIP or PMI) are generally required if the down payment is less than 20% of the home’s purchase price. For FHA loans, an upfront mortgage insurance premium (UFMIP) of 1.75% of the base loan amount is required at closing and can be financed into the loan. FHA loans also include an annual MIP, typically 0.55% of the loan amount, paid monthly, which may continue for the loan’s life or for 11 years. Private Mortgage Insurance (PMI) for conventional loans is often collected for a few months upfront at closing.

Property-Related Fees

Before closing, a home inspection assesses the property’s condition, costing $296 to $424, with costs increasing for larger or older homes. Specialized inspections may be recommended, such as a pest inspection ($125 to $450), a radon test ($125 to $400), or a sewer scope inspection ($250 to $1,200) which uses a camera to examine the sewer line.

A property survey determines the exact boundaries of the land, costing $375 to $745 for a standard boundary survey on a half-acre or less. This fee varies based on property size, terrain complexity, and survey type. A title search investigates public records to confirm legal ownership and identify any liens or claims against the property, usually costing $75 to $200.

Title insurance protects against future claims to the property’s ownership. Lender’s title insurance protects the mortgage lender, while owner’s title insurance protects the buyer. Lender’s title insurance typically costs 0.5% to 1% of the mortgage amount. Owner’s title insurance, while optional, is recommended and usually costs 0.5% to 1% of the purchase price, or $1,000 to $4,000. These policies are paid once at closing and remain in effect as long as the buyer owns the home.

Legal and Administrative Fees

Attorney fees are required in some states for real estate transactions, covering document review and closing services. These fees typically range from $750 to $1,250 for residential transactions, varying by complexity and location. Some attorneys charge hourly rates of $150 to $600 per hour.

Escrow fees are paid to a neutral third party, such as an escrow or title company, to manage the closing process and distribute funds. These fees can average 1% to 2% of the home’s purchase price, or sometimes a flat fee. Recording fees are charges from state and local government agencies to officially register the transfer of property ownership and the mortgage. These fees vary by county and document size, with buyers typically paying around $125. Notary fees are charged for witnessing signatures on legal documents, costing $5 to $20 per signature, depending on the state.

Prepaid Expenses

Buyers often prepay certain expenses at closing, held in an escrow account managed by the lender. This includes pro-rated property taxes, covering the portion of the year the buyer will own the home. Property taxes vary by location and are based on the home’s assessed value.

Homeowners insurance premiums, typically for 12 months, are also collected upfront. Initial Homeowners Association (HOA) dues, if applicable, might also be collected for a few months upfront. An HOA transfer fee, a one-time administrative charge of $100 to $500, covers transferring ownership documents within the HOA.

Initial Post-Purchase Expenses

Once the home purchase is complete, immediate expenses arise as buyers settle into their new residence. These initial post-purchase costs are important to budget for, even though they are not part of the closing process.

Moving costs vary based on distance and volume of belongings. Hiring professional movers for a local move averages around $1,700, while a long-distance move costs approximately $4,800. This includes packing, loading, transportation, and unloading. Renting a moving truck for a do-it-yourself move can be more affordable, averaging around $150 for local moves, plus fuel and per-mile fees.

Utility setup and connection fees are necessary to establish essential services. These include charges for transferring or setting up new accounts for electricity, gas, water, and sewer. Specific fees vary by utility provider and location, with some municipal services having flat connection charges.

Initial cleaning and minor repairs often precede moving in. Professional deep cleaning services cost $120 to $250 per visit, depending on home size and cleaning extent. Changing locks on all exterior doors for security is common, costing $45 to $500 per lock, or $250 to $299 for rekeying multiple doors. Addressing immediate cosmetic updates, like painting, costs an average of $2,021 for an interior house paint job, with prices ranging from $2 to $6 per square foot.

Basic furnishing and appliance purchases are another consideration, especially if the home does not include essential appliances or if existing furniture is insufficient. This can involve significant expenditures for items like refrigerators, washing machines, and beds. Installing a home security system can range from $70 for a DIY kit to over $2,000 for a professionally installed system, with an average installation cost of $747.

Ongoing Homeownership Expenses

After the initial purchase and move-in, homeowners face recurring expenses that form the long-term financial commitment of property ownership. Budgeting for these continuous costs is essential for financial stability.

Mortgage payments represent the primary ongoing expense for most homeowners. This monthly payment typically comprises principal and interest, with the interest portion gradually decreasing over the loan’s term as more principal is paid down.

Property taxes are a significant annual or semi-annual obligation levied by local governments, funding public services like schools and infrastructure. They are typically collected monthly through an escrow account managed by the mortgage lender. The amount is assessed based on the home’s value, and the median U.S. property tax bill reached $3,500 annually between 2023 and 2024.

Homeowners insurance is another recurring expense, protecting against damage to the home and liability. Annual premiums average $2,110 to $2,601 for $300,000 in dwelling coverage, often collected monthly via the escrow account. Rates depend on location, home characteristics, and coverage limits.

Utility bills are a variable monthly cost. The average monthly utility bill in the U.S. is $433 to $600, including electricity, natural gas, water, sewer, trash, internet, and cable. Electricity bills average $123 per month, internet averages $64, water bills range from $40 to $60 per month, and sewer bills are $60 to $90 monthly. These costs fluctuate based on usage, home size, efficiency, and local rates.

Homeowners Association (HOA) fees apply to properties within managed communities. These monthly, quarterly, or annual fees, averaging $200 to $300 per month nationally, cover common area maintenance, amenities like pools or clubhouses, and certain services. Fees can range from $100 to over $1,000, depending on amenities and location.

Maintenance and repairs are an ongoing budget item. Experts suggest setting aside 1% to 4% of the home’s value annually for routine upkeep and unexpected issues. For a $300,000 home, this means budgeting $3,000 to $12,000 per year for tasks such as landscaping, HVAC servicing, roof repairs, or appliance breakdowns.

Optional services can add to ongoing costs. A home warranty, covering repairs or replacements of major home systems and appliances, typically costs $56 to $62.33 per month, plus a service fee of $65 to $150 per visit. Pest control services, if needed regularly, cost $40 to $75 per visit for monthly service or $100 to $260 for a one-time treatment. Security monitoring subscriptions for a home alarm system range from $20 to $80 per month for professional monitoring.