What are the hidden costs of buying a home?

Buying a home can feel like winning the jackpot… until the hidden costs sneak up on you and take a bite out of your budget. Don't let unexpected expenses turn your dream home into a financial nightmare. Here's what you need to watch out for (and how to prepare).

1. Closing Costs: The Icing on the Mortgage Cake

Think your down payment is the only upfront cost? Think again. Closing costs can range from 2% to 5% of the home's purchase price and include:

• Loan origination fees
• Appraisal and inspection fees
• Title insurance
• Escrow fees

Pro Tip: Ask your lender for a Loan Estimate to get a detailed breakdown before you sign anything.

2. Property Taxes: Your New Annual Bill

Once you own the home, you'll need to pay property taxes. These can vary wildly depending on where you live but are usually based on your home's assessed value. Most lenders roll this into your monthly mortgage payment.

3. Homeowner's Insurance: Protection You Can't Skip

Lenders require homeowner's insurance to protect their investment. While the cost depends on your home's size, location, and coverage, expect to pay $1,000 to $2,500 per year on average.

4. Private Mortgage Insurance (PMI): The Cost of a Small Down Payment

If your down payment is less than 20%, you'll likely have to pay PMI. This can add 0.5% to 1% of your loan amount per year to your costs. The good news? You can cancel it once you reach 20% equity.

6. HOA Fees: The Price of Community Living

If you're buying in a neighborhood with a homeowners association (HOA), you'll need to pay monthly or annual fees. These can range from $200 to $1,000+ per month, depending on amenities.

7. Utilities: More Than You're Used To

Moving from a smaller space? Be prepared for higher costs for heating, cooling, water, and electricity. Factor in $200 to $500 per month for a mid-sized home.

8. Moving Costs: Getting In Isn't Free

Whether you're hiring movers or renting a truck, getting your belongings to your new home will cost you. Budget $1,000 to $3,000 depending on the distance and services needed.

9. Furniture and Decor: Making It Feel Like Home

Your new home might need more furniture (and curtains, rugs, and light fixtures). Costs can add up fast, so plan accordingly.