10 Expenses Newbie Homebuyers Don’t Consider


The actual purchase price of a new home is typically a hefty amount – every buyer knows that. But what many new homebuyers might not realize is how much extra they’ll have to spend above and beyond what the actual home costs. When all is said and done, buyers could be spending tens of thousands of dollars more than the home itself. As such, it’s critical to be aware of such expenses in order to budget accordingly.

The following are some expenses related to homebuying that many newbie buyers tend to neglect.

1. Closing Costs

You’ve managed to secure a mortgage, but that’s not all you’ll be spending for your new home. In addition to the actual mortgage itself, you can expect to have to dish out for any of the following closing costs:

  • Appraisal fee to have the subject home’s actual value accurately assessed;
  • Home inspection to ensure the home is in good condition without any major issues;
  • Title insurance to make sure there aren’t any liens or other issues on title of the property;
  • Land transfer taxes (the amount of which varies from one county and city to the next).

Generally speaking, closing costs usually run anywhere between 2% to 5% of the purchase price of the home. With that in mind, be sure that you’ve set aside enough money to adequately cover these costs.

2. Moving Costs

If you’re moving out of your parents home, you likely don’t have much to move into to your new abode. However, even that futon or reading chair that you love will require some funds to have transported to your new house. Whether you pay a mover to do it or even rent a U-Haul truck, it will still cost some money upfront. 


Not only will you be responsible for paying the principal portion of your mortgage back to your lender, you’ll also have to tack on a few extras along with it. ‘PITI’ is an acronym for principal (the payment for the house), interest, taxes, and insurance, which add up to make the total mortgage payment you pay each month.

4. Utilities

It costs money to have your cable, telephone, internet, electricity, gas, and water hooked up, even if the previous owner had these services. Just the administrative task of transferring names from the last owner to your name can cost a bit of money.

5. New Furniture and Appliances

Furnishing a home from top to bottom – including sofas, kitchen tables and chairs, beds, end tables, washer and dryer, and so forth – is where the real money is needed. You can easily spend tens of thousands of dollars on this stuff, so it’s critical that you budget accordingly. Ideally, saving up well in advance of buying a new home will give you enough time to build a sizeable pot of cash with which you can buy all the pieces needed to outfit your home.

6. Maintenance and Updates

Along with homeownership comes a whole lot of maintenance and repairs. Things will break down. They’ll get old and suffer wear and tear. Whether you’re painting, repairing chipped tiles, replacing roof shingles, fixing the wiring or plumbing, cleaning the gutters, or repaving the driveway, this all costs money. As a general rule of thumb, budget approximately 1% of your home’s purchase price every year to dedicate to home maintenance costs.

7. Homeowner’s Insurance

You won’t be approved for a mortgage if your home is denied homeowner’s insurance. Ideally, the policy you obtain will cover both the property itself as well as the contents within it. This can cost a few hundred bucks every year.

8. Private Mortgage Insurance

If your down payment was less than 20% of the purchase price, you’ll be responsible for paying Private Mortgage Insurance (PMI), which protects the lender in the event that you default on your mortgage. Fees vary from one lender to the next, as well as from one type of mortgage to another. While the fine details of PMI can be complex, once you’ve paid down the mortgage to the point that you owe less than 78% of the purchase price, the PMI payments will generally be dropped.

9. HOA Costs

If the property you’ve just purchased is located in an HOA-governed community, you will have to pay monthly dues to the HOA association. This fee covers the cost of maintaining common grounds as well as padding the ‘reserve fund’ that’s used to pay for any major repairs in the future. Every HOA is different, and fees can vary dramatically from one to the next.

10. Property Taxes

This annual fee will be disclosed on the home listing so you’ll be aware of it upfront. The percentage of tax that you have to pay will vary from one county to the next, but generally speaking, it will be somewhere in the range of 1% to 2% of the value of your home, and even more in affluent neighborhoods.

The Bottom Line

As you can see, the costs of buying a new home can really add up. But as long as you’ve budgeted adequately, are realistic about these extra expenses, and have taken the time to save up for them, you’ll be as good as gold and can enjoy the privilege of homeownership.