Are you considering buying your dream home? Before you buy a home, know that owning one includes more than the down payment and mortgage. There are additional responsibilities and costs you need to consider. There are other costs you need to think about, like mortgage fees and maintenance expenses. Each of these costs affects your overall budget, so it's crucial to be aware of them.

This blog highlights some common hidden costs of buying a home and provides estimated numbers for some of these expenses. It aims to help first-time homebuyers be prepared when closing on their dream home.

Did you know that buying a home involves more than one Hidden Costs?

When purchasing a home, it's easy to focus on the price tag and the down payment. However, following hidden costs can catch you by surprise.

1. Origination Fees:

What are they?

Origination fees are charges that lenders require to cover the costs of setting up a mortgage loan. These fees pay for checking your loan request. They also pay for preparing the paperwork and handling administrative tasks.

Why do you pay them? To cover the costs of processing your loan.

How much? - Usually 0.5% to 1% of your loan amount, but can vary depending on the lender and loan program.

When do you pay? - At closing, either upfront or included in the loan.

2. Application Fees:

What are they?

Application fees are what lenders charge to handle your mortgage application. These fees cover tasks like checking your credit, looking at your background, and paying for the initial paperwork.

Why do you pay them? - To cover the costs of checking if you're suitable for the loan based on your credit and other factors.

How much? - $200 to $500, but can vary depending on the lender and loan program.

When do you pay? - When you apply for a mortgage, This fee has to be paid regardless of whether your loan gets approved or not, and you can't get it back.

3. Points in a Mortgage Context:

What are they?

Points, sometimes called discount points or origination points, are fees you pay to the lender when you close on a mortgage. In return, you get a lower interest rate on your loan.

Why do you pay them? - To reduce your monthly mortgage payments.

How much? - 1% of the loan amount per point.

When do you pay? - At closing, optional based on your financial plan.

‍4. Title Search Fees:

What are they?

Title search fees cover the cost of researching the property's ownership history to ensure there are no issues with the title. This is important. It verifies that the seller has the right to sell the property and that there are no hidden problems. These could include unpaid taxes or liens and could affect your ownership.

Why do you pay them?

To confirm the property's legal ownership
To uncover any potential issues with the title

How much? - The cost varies, but it typically ranges from $100 to $400, depending on the location and complexity of the search.

When do you pay? - Title search fees are usually paid at closing, included in your closing costs.

5. Attorney Fees:

What are they?

Attorney fees are the costs you pay for legal services during the home buying process. These fees cover a range of tasks that attorneys handle to ensure the transaction is smooth and legally sound.

Why do you pay them? To review contracts, conduct title reviews, and handle closing paperwork.

How much? Varies by attorney and location.

When do you pay? At closing.

6. Transfer Taxes:

What are they?

Transfer taxes are fees imposed by state and local governments. They are also known as deed transfer taxes or stamp taxes. They are imposed when a property changes hands. The tax is a percentage of the property's sale price.

Why do you pay them? - To legally record the transfer of property ownership and to support state and local government budgets.

How much? - The amount varies by location and is usually a percentage of the home's sale price. The percentage can differ significantly depending on the state or municipality.

When do you pay? - At the time of closing, when the property sale is finalized.

7. Common Maintenance Costs:

Yearly HVAC Check-up Checking your heating and cooling system once a year usually costs between $75 to $200. The price can vary based on how big your system is and how much work the inspection involves.
Changing your HVAC filters regularly is really important. It helps your system work well and keeps the air clean. Filters usually cost between $10 and $20 each.
Cleaning your air ducts by a professional can cost between $300 and $500. The price depends on how big your home is and how much cleaning needs to be done.
Getting your HVAC system tuned up means giving it a check-up. This involves cleaning it, putting some oil where needed, and fixing small issues. It usually costs between $100 and $200 each time.
Emergency Repairs Unexpected HVAC repairs can cost very different amounts. Common issues, like replacing a compressor, can cost $1,500 to $2,500.

8. Typical Roof Repair Costs:

Professionals charge $150 to $400 for a roof inspection. The cost depends on the roof's size and complexity.
The cost of replacing damaged shingles can range from $100 to $300 per square (100 square feet) of roofing.
Regular gutter cleaning services can cost around $100 to $200, depending on the size of the home and the condition of the gutters.
Fixing roof leaks can cost different amounts. Minor leaks cost $200 to $400. Major leaks need big repairs and can cost over $1,000.

9. Expenses Associated with Plumbing Repairs:

Detecting leaks professionally can cost $100 to $400. The cost depends on the complexity of the issue and the equipment used.
Repairing damaged or leaking pipes can range from $150 to $1,000, depending on the location and extent of the repair.
These services cost $100 to $200 per year. They include flushing the tank and inspecting its parts.
Clearing clogged drains or pipes can cost between $100 to $300, depending on the severity of the clog and the tools required for removal.
Upgrading plumbing fixtures, like faucets or toilets, can cost from $150 to $500 per fixture. This cost includes installation.

10. Setup Fees for Electricity:

Electricity providers may charge a connection fee to start service at a new property. The fee ranges from $30 to $100, depending on the provider and location.
Security Deposit Some electricity providers require a security deposit from new customers. This is especially true for those with little credit history or past payment issues. Security deposits can vary but are typically around $100 to $200.
Meter Installation If a new meter needs to be installed at the property, homeowners may face extra fees. The fees range from $50 to $200 for the installation.
Service activation fees cover the administrative costs of setting up the account. They can range from $10 to $50, depending on the provider.

11. Cost to Set Up Water Service:

Water service providers may charge a connection fee to start water service at a new property. The fee is usually $20 to $100, and depends on the provider and location.
Meter Installation If a new water meter is needed, homeowners may incur extra fees. These can range from $50 to $200 for the installation.
Service Activation Like with electricity, water activation fees cost $10 to $50. They cover the admin costs of setting up the account and starting service.
Security Deposit Some water providers may require a deposit from new customers. It is typically $50 to $150. The deposit secures the account and covers any potential unpaid bills.

12. Fees for Setting Up Gas Service:

Gas providers may charge a connection fee. It's to start gas service at a new property. The fee is usually $30 to $100. The exact amount depends on the provider and location.
Meter Installation If a new gas meter needs to be installed on the property, homeowners may face extra fees. These fees range from $50 to $200 for the installation process.
Service Activation Gas service activation fees can range from $10 to $50. They cover the costs of setting up the account and starting service.
Gas providers may require a deposit. This is like what electricity and water services require. It's typically $100 to $200. The deposit secures the account and covers any potential unpaid bills.

13. Costs of Renovating a Kitchen:

Upgrading kitchen cabinets can cost $1,500 to $15,000 or more. The cost depends on the material quality, kitchen size, and design complexity.
Installing new countertops, such as granite, quartz, or marble, can cost between $2,000 to $5,000 for an average-sized kitchen.
Upgrading kitchen appliances will include a refrigerator, stove, dishwasher, and microwave. This can cost from $2,000 to $8,000 or more, depending on the brand and features.
Installing new flooring, such as hardwood, tile, or laminate, can cost between $1,500 to $4,000 for an average-sized kitchen.
Upgrading light fixtures, under cabinet lights, and recessed lights can cost $500 to $2,000. The cost depends on the size of the project.

14. Typical Costs of Bathroom Renovation:

Replacing bathroom fixtures is expensive. This includes a toilet, sink, and bathtub. It can cost $1,000 to $5,000. The cost depends on the quality and style of the fixtures.
Installing new tile for the shower, floor, and walls can range from $1,000 to $4,000, depending on the size of the bathroom and the type of tile selected.
Upgrading the bathroom vanity and sink can cost between $500 to $3,000, depending on the materials and design.
Installing a new shower or bathtub can range from $1,000 to $5,000, depending on the type of unit and any plumbing modifications required.
Upgrading lights, mirrors, and accessories can cost $500 to $2,000. The cost depends on the style and quality of the items.

15. Expenses Associated with Replacing Flooring:

Hardwood Flooring: The cost of installing hardwood flooring varies by wood type and method. It can range from $6 to $12 per square foot.
Laminate Flooring: Installing laminate flooring typically costs $3 to $7 per square foot. It is a more budget-friendly option for homeowners.
Tile Flooring: The cost of installing tile flooring can range from $7 to $15 per square foot. It depends on the type of tile, the design, and the installation method.
Carpeting: Replacing carpeting can cost between $2 to $5 per square foot, depending on the quality and style of the carpet.
Vinyl Flooring: Installing vinyl flooring typically costs $2 to $5 per square foot. It offers a durable and cheap flooring option for homeowners.

16. Installation Fees for Internet and Cable Services:

Internet service providers (ISPs) may charge installation fees ranging from $50 to $200 or more, depending on the complexity of the setup and any necessary equipment installation.
Cable TV providers often charge installation fees, which can range from $50 to $150 or more, depending on the number of cable outlets and any additional equipment required.
When bundling internet and cable services, installation fees may be waived or reduced as a promotional offer, but it's essential to check with the provider for specific details.

17. Monthly Subscription Fees:

Monthly internet subscription fees can vary widely, ranging from $30 to $100 or more, depending on the speed, data caps, and whether the service is bundled with other offerings.
Cable TV subscription fees can range from $50 to $150 or more per month, depending on the number of channels, HD quality, and any premium channel add-ons.
Bundling internet and cable services can often result in discounted monthly fees, with providers offering promotional rates for the first 12-24 months of service.

18. Equipment Rental Costs:

Fuel Costs Associated with Commuting:

The cost of gasoline can fluctuate based on market conditions, with average prices ranging from $2 to $4 per gallon in the United States.
The fuel efficiency of the vehicle plays a significant role in determining fuel costs, with gas mileage varying depending on the make and model of the car.
The distance traveled to and from work impacts fuel costs, with longer commutes resulting in higher gasoline expenses over time.
Commuters can estimate their monthly fuel costs by calculating the average miles driven per day and the vehicle's fuel efficiency to determine the total gallons consumed and associated expenses.

Public Transportation Fees:

Bus Fares: Public bus fares typically range from $1 to $3 per ride, depending on the city and transit system.
Subway/Train Tickets: Subway or train tickets can cost between $2 to $5 for a single ride, with discounted rates available for weekly or monthly passes.
Monthly Passes: Many public transportation systems offer monthly passes for regular commuters, with prices ranging from $50 to $150 or more, depending on the location and services included.
Discount Programs: Students, seniors, and people with disabilities may get discounts for public transit. This provides cost-saving options for eligible riders.

Parking Fees to Consider:

Daily parking fees in urban areas can range from $10 to $30 or more, depending on the location and proximity to popular destinations.
Monthly parking passes for commuters can cost between $50 to $300 or more, depending on the parking facility and amenities offered.
Metered parking rates vary by city and location, with hourly rates typically ranging from $1 to $5 per hour.
Some employers or residential buildings may require parking permits for on-site parking. The fees range from $50 to $200 per month.

19. Additional Expenses Related to Education:

The cost of school supplies, like notebooks, pencils, pens, and folders, can add up fast. This is especially true for families with many children. The average annual cost of school supplies can range from $50 to $200 or more per child.
Participation in after-school activities, like sports, music, or art, may have extra fees. They are for equipment, uniforms, or participation. These fees can range from $50 to $500 or more per activity.
Schools often have field trips to improve education. Parents may be asked to help pay for transportation and admission. Field trip expenses can range from $10 to $50 or more per trip.
Some schools provide free or cheap lunches. But, parents may need to budget for extra expenses. These are for packing lunches or providing snacks for their children.
Schools may charge technology fees to cover the cost of devices, software, and internet. This is because technology use in education is increasing. These fees can range from $50 to $200 or more per year.‍

Key points to understand about the hidden costs of home buying

And what are the hidden costs of home buying? Following points:

Highlights common hidden costs of home buying and provides estimated costs. It aims to prepare first-time home buyers for the financial aspects of closing on their dream home.
Home buying has hidden costs. These include: origination fees, application fees, points in a mortgage, title search fees, and attorney fees.
Real estate agents, financial advisors, are involved in the hidden costs of home buying.

Remember to consult a real estate agent or professional for additional guidance.