From closing costs to association dues: The true price tag of a new home

The true cost of buying a home can be a lot more than the agreed-upon sale price. Along with your monthly mortgage payment, you will likely find yourself shelling out for other upfront and ongoing expenses. Closing costs, homeowners association fees, property taxes, utility bills and imminent home repairs can add hundreds — if not thousands — to your expenditures.

Avoid unpleasant financial surprises by familiarizing yourself with some of the more common expenses associated with buying or building a new home. Budgeting for added monthly expenses — and setting some aside for emergencies — will help ensure your new dream home is also an affordable one.

1. Closing Costs: 2 Percent to 5 Percent of Home Price

One of the first extra expenses when buying a new home, closing costs refer to an assortment of fees incurred when you "close" the deal. The closing costs are paid to the lender and cover a wide array of expenses, including fees for obtaining your credit report, appraising the home's market value, conducting a title search and surveying to determine the property boundaries. The total closing costs can vary greatly based on the home's location, the type of loan and the loan duration; however, buyers should expect to pay between 2 percent and 5 percent of the purchase price.

About three days before the official closing, the lender will provide a disclosure statement showing all estimated fees and expenses. However, you can estimate your costs with an online closing cost calculator, such as the one provided by Bank of America.

You might be able to save money on closing costs by asking the seller to pay some (or all) of the bill. While this tactic might not work in a hot real estate market, it can be effective if the seller is motivated or if the home has been on the market for a long time.

Related: How Long Does It Take to Buy a House?

2. Homeowners Insurance: $1,100+ Per Year

Unless you're buying your home with cash, your lender will likely require proof of homeowners insurance before closing. Like car insurance, homeowners insurance rates vary by coverage type and location. However, lenders typically expect a buyer to purchase enough coverage to rebuild or replace the home.

According to the Insurance Information Institute, the average annual homeowners insurance bill is $1,096, and the rates have been trending upward. An online insurance calculator can give you a general idea of insurance costs, based on the size of the home and average construction costs in the area.

To get the best price on homeowners insurance, you should secure quotes from multiple companies. You might also be able to get a discount by asking one of your current insurers, such as your auto insurance company, if it offers a discount for bundling.

3. Homeowners Association Fees: $10 to $575 Per Month

If you're purchasing a condo, townhouse or home that belongs to a homeowners association, you should expect to pay fees to the group on a regular basis. These assessments typically cover general grounds maintenance and repairs to exterior areas, as well as access to amenities such as a fitness center or pool.

HOA prices vary by location and community. According to a 2015 Trulia report, New York City HOA fees average $575 per month, compared to a paltry $25 in Memphis, Tenn. Even within a geographic region, such as the Henderson/Las Vegas area, fees can range from $10 to $500, according to realtor Elisa Dease of Knapp Realty. Additionally, new buyers often have to pay HOA transfer fees to receive association paperwork.

"Usually, I ask the seller to pay for the transfer fee, but if they won't, the buyer can pay for it, since it is a fee to set up service for them," Dease said. This fee is determined by the association and can range from $100 to $400.

Buyers should review the information they receive with care, as it could affect future payment amounts.

"It's a good idea for buyers to contact the association to review the association's bylaws and meeting notes to determine if there are any planned repairs or improvements that would trigger a special assessment or an increase in monthly assessments," said former realtor Chrystal Caruthers, now the director of content for "Buyers must treat their monthly assessments just like a mortgage payment because the association can file foreclosure against you, just like the bank."

4. Property Taxes: $1,000+ Per $100,000 Per Year

New homebuyers might not realize the effect property taxes can have on home costs. In many cases, your property tax and insurance payments will be rolled into your monthly mortgage payments under "escrow." As a result, you might end up paying more than you anticipated each month.

Because property taxes vary greatly from state to state or even from city to city, you might want to check with your realtor to determine the going rate for your region. New Jersey's average property tax rates are among the highest in the country at 2.11 percent of a home's market value, while Hawaii's are the lowest, averaging just .28 percent, according to a 2016 report by the Tax Foundation.

While you might have access to the previous owner's property tax payments, your new tax rate could be significantly higher (or lower) if the home's sale price differs from the most recent county estimate on the home's value. Clayton Closson of Quicken Loans advises homebuyers to do their research so a high tax bill won't take them by surprise.

RELATED: 7 tips for homebuyers, according to Mike Holmes:

5. Imminent Repairs: Several Hundred to Several Thousand Dollars

Plan on factoring home repair costs into your household budget, at least for the first few months. Depending on the age of the home, you might need to replace the floor, update an old shower or install new, more efficient windows. Additionally, you should ask the previous homeowner to disclose potential problem areas, such a leaky garage roof, and pay close attention to the results of the inspection.

"Inspections are less costly than an appraisal, and this way if you find something wrong with the inspection, you can back out and not have lost too much money," Dease said. "Having peace of mind is worth the couple-hundred dollar investment."

To save money, ask the previous owner to cover some or all of the more serious repairs before you agree on the home's purchase price. In some cases, the owner might opt to give you a better price on the home instead of making repairs. If the property needs extensive work, such as a new garage, driveway or addition, get estimates from contractors before purchasing the home to eliminate surprises down the line.

Related: Is Buying a House Cheaper Than Building a House?

6. Home Furnishings: Several Hundred to Several Thousand Dollars

Costs for furniture, appliances and other home necessities can add up fast. Items such as sofas, beds and dining room tables can cost hundreds or even thousands depending on your taste. You'll also need applicances like a washer and dryer, refrigerator and oven if the previous owner did not leave them behind. Even the cost of drapes, curtains or blinds can be significant if the home has a lot of windows.

Save money by asking the previous owner to leave behind window coverings and large appliances. If the owner's new home is already stocked with many of these items, the odds are good that he or she will say yes to some of your requests.

7. Lawn Care and Outdoor Maintenance: $100 to $200 Per Month

If your new home is not part of an association, and it has a yard, you will be responsible for lawn care and general maintenance. If you don't want to purchase a lawn mower, rake, hedge trimmers and other basic equipment to maintain your own yard, you can expect to spend $100 a month or more paying for yard work, according to

In a cold climate, you might need snow shovels or a snow blower. In a pinch, you can borrow or rent the equipment, or you can pay a local landscaping company to handle the work. According to, you can expect to pay $25 or more per hour to have someone shovel or use a snowblower on your property.

To save money, buy used gear from a lawnmower repair shop or hit the yard sales in your area.

8. Utility Bills: $180+ Per Month

According to the U.S. Department of Energy, the average homeowner's annual utility cost was $2,200 in 2014. This number can vary widely based on your personal energy usage, the climate and the size and energy efficiency of your home.

To get an idea of what to expect, ask the previous owner if you can see the past year's bills, or at least copies of bills from peak winter and summer months. Your usage statistics will vary, but at least you'll have a general idea of what to expect.

You might also have to pay a deposit or connection fee to create a new account with the gas, electric or water utility. Expect to pay at least $50 per utility, as well as applicable service fees.

To save on your utility bills, cut back on your usage of electricity, water and gas. Install smart thermostats that adjust the heat and air conditioning while you're away and seal air leaks around windows. You should also unplug electronic devices and their chargers when they aren't in use. The U.S. Department of Energy offers more valuable energy-saving tips in its Energy Saver publication, available online.

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