The Hidden Costs of Buying a New Home

Shopping for a house is fun, but looking at that six figure (or more!) price tag is not. We all know it’s expensive to buy a house, and that almost everyone takes out loans to do so, but what new buyers may not know is that the ticket price for a new home is significantly under what they will end up paying for that house. While most everything comes with hidden costs (think buying a dog and then having to buy toys, food, a leash, etc…), the hidden costs of buying a home are proportional to the home price; i.e. expensive.

Things that new home buyers might not realize are going to cost them money include a home inspection or survey costs, both of which can be hundreds of dollars – though they may save buyers from potential money-sinks down the road. Taxes can be another huge expense, and they can sometimes require payment at the completion of a sale. If a family is putting less that 20% down on a new home, they are required to use an escrow account, which enables your mortgage company to pay your twice-yearly property taxes for you. Without it, your initial bill at closing could be a nasty shock.

Finally, there are all the little hidden fees associated with the process, like credit report fees, tax service fees, appraisal fees, government recording charges, etc… All of these are likely small, but they add up to an uncomfortable amount, and that doesn’t include your lender’s origination fee, which is the charge for processing your loan application. At an interest rate of 3.5%, it can be a steep charge.

These are just the fees associated with the actual sale of the home, and don’t include things like moving costs, customization of the home, or repairs for that first year. The bottom line is, make sure you have more than you think you need before you begin the process of buying a home, because what’s on the price tag isn’t the only thing for which your checkbook will be answering.