Extra Expenses When Buying a Home

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By AJ Smith

Most of us have a basic understanding of what goes into buying a home. After saving enough for a down payment and getting pre-approved for a mortgage you can start your home search and make an offer once you're ready. But before you ever set foot in that new house of yours, there are going to be quite a few costs that come up, many that you may not be expecting.

In order to prepare yourself, you should be fully aware of all the costs that go into buying a home. That way, you won't be surprised at any point during the process.

Earnest Deposit: Although the earnest deposit is part of your down payment, it has to be made right away. This deposit is required in order to show that you the buyer are indeed serious about the property. It's generally in the amount of 1 percent of the value of the property's sale price or $1,000. It is just a deposit though, so you can get that money back up until the point when you remove your contingencies.

Home Inspection: Although the home inspection is generally considered part of closing costs, it's another fee that you have to pay upfront. Home inspections are essential to the buying process since they could uncover any potential structural flaws in the property. Home inspections generally range from $300 to $500. If you end up walking away from the property due to something you found in the home inspection you'll be out at least $300.

Renovation and Improvements: If your home isn't in the best of shape, you may want to consider renovating it before you move in. It's a lot easier to put new floors in or paint the walls before you have all your furniture moved in. Most homebuyers tend to forget about the initial renovation costs, so be sure to factor that into your calculations. A good rule of thumb is to assume that renovations and improvements will total about 1 percent of your purchase price. Of course, this can increase drastically depending on the condition of the house.

Move-In Costs: Any time you're moving into a new home there are lots of major expenses to consider. Everything from buying boxes to hiring an actual moving company will add up. And the further you move geographically, the higher your costs will be. Keep in mind that if you're moving into a community with a homeowners association, you will likely have to pay an initiation fee. Make sure that you get the details ahead of time since you don't want to be fined by your HOA in your first week at your new property.

New Appliances and Utilities: Some houses come with a refrigerator, washer and dryer, but if yours doesn't, be sure to factor that into your calculations. You will also have to contact utility companies and cable TV/Internet companies in order to get your new service hooked up -- there may be small fees for this as well.

Real-Estate Agents' Fees: This is probably one of the biggest hidden costs when it comes to buying a house because they won't ever show up on any piece of paper. Generally, the sellers pay real-estate agents' fees for both the buyer's and seller's agents (3 percent each) but those costs often will be reflected in a higher sale price.

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Extra Expenses When Buying a Home

Bank-owned inventory built before 1960 and valued under $100k:  3,773

Average market value: $41,503

Median distressed sales price annual change: -6.50%

Bank-owned inventory built before 1960 and valued under $100k:  1,649

Average market value: $71,659

Median distressed sales price annual change: -6.13%

Bank-owned inventory built before 1960 and valued under $100k:  1,318

Average market value: $59,800

Median distressed sales price annual change: -8.73

Bank-owned inventory built before 1960 and valued under $100k:  1,021

Average market value: $60,556

Median distressed sales price annual change: No data

Bank-owned inventory built before 1960 and valued under $100k:  1,016

Average market value: $67,003

Median distressed sales price annual change: -4.11

Bank-owned inventory built before 1960 and valued under $100k:  865

Average market value: $67,712

Median distressed sales price annual change: 5.49%

Bank-owned inventory built before 1960 and valued under $100k:  846

Average market value: $72,190

Median distressed sales price annual change: -10.71%

Bank-owned inventory built before 1960 and valued under $100k:  763

Average market value: $62,574

Median distressed sales price annual change: 41.24%

Bank-owned inventory built before 1960 and valued under $100k:  724

Average market value: $54,854

Median distressed sales price annual change: 9.36%

Bank-owned inventory built before 1960 and valued under $100k:  694

Average market value: $65,310

Median distressed sales price annual change: 16.91%

Bank-owned inventory built before 1960 and valued under $100k:  689

Average market value: $57,954

Median distressed sales price annual change: No data

Photo: Angelo & Mantia Photography

Bank-owned inventory built before 1960 and valued under $100k:  612

Average market value: $54,600

Median distressed sales price annual change: 7.89%

Bank-owned inventory built before 1960 and valued under $100k:  600

Average market value: $60,557

Median distressed sales price annual change:  16.74%

Bank-owned inventory built before 1960 and valued under $100k:  526

Average market value: $74,005

Median distressed sales price annual change:  no data

Bank-owned inventory built before 1960 and valued under $100k:  513

Average market value: $56,401

Median distressed sales price annual change: -14.93%

Photo: Betsy Weber, Flickr.com

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