What Are the Largest Hidden Costs of Buying a House?

Buying a house

The average home in the United States cost $200,000. You might have saved up for this or have been accepted for a housing loan, but take note that just because a house’s price tag is $200,000 does not mean you’ll only be spending $200,000. 

Buying a home can be exciting, but you shouldn’t forget the additional hidden costs that will most definitely come with buying property. Because when these costs accumulate, they can reach the tens of thousands of dollars that you might not be prepared to pay for.

Property Taxes

Property taxes are a permanent expense for homeowners; they’ll continue to pay property taxes even after they’ve paid their house in full. You’ll pay this to your local town, municipality, or city you reside in, not the bank.

A property tax payment can go as low as $500 and reach a thousand dollars or more. Your property tax is based on your property’s value: cheaper homes pay less taxes than large homes and mansions. It can also depend on where you live, as the price of real estate can vary between states and cities. 

These tax payments are in perpetuity, meaning you can’t legally escape paying property taxes. However, there are legal ways to reduce the amount of property tax you pay every year. 

Homeowners’ Association or Condominium Fees

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Most houses are part of a neighborhood with a homeowners’ association, while most condominium buildings have a condominium association. As soon as you own property that falls under the association, you’ll be required to pay monthly or quarterly fees, depending on the established rules. 

The cost of these fees can vary between associations, though most likely high-income neighborhoods will have bigger association fees than low-income neighborhoods and condominiums. These fees will be used for the upkeep of the shared areas. 

For neighborhoods, these will go to garbage collection, snow plowing, security, repairs, or paying an outsourced company to perform these services. In condominiums, these pay for the electricity used in shared areas, cleaning, repairs, upkeep. These fees can also be used for events and installing new features in your shared areas.

Homeowners Insurance

If you’ve taken out a housing loan from a bank or mortgage company, you’ll most likely to be required to get insurance before they can give you a loan. It’s not a hidden cost because you can’t buy a house until you get insurance, but it’s an additional cost that can add up if you want to increase your coverage since not all basic insurance policies cover accidents considered an “act of God.”


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If you’re buying a pre-owned house or want to make additional changes to a new house, take note that it will cost additional to have it renovated. For old houses, you might need to replace certain parts that are worn out. It’s much better to get this done before you move into your new home, but this will definitely add to the additional costs you have to pay. Sellers are also required to disclose if the house is infested with termites or mold, so should you choose to buy the property, you’ll be dealing with these before the house can be livable.  

Some of the renovations you may need to do include the electrical system, plumbing, HVAC, roofing, and insulation. You might also want to do aesthetic renovations such as applying a fresh coat of paint or changing the floor tiles. Depending on the quality of the contractor you hire and the size of your house, this can be an additional thousand or tens of thousands of dollars.

Real Estate Agent Fee

Real estate agents help you in finding the right home for your needs and budget by using their network to find houses in the market. When you do settle on the property you want, your real estate agent will handle all the paperwork to making the property in your name. 

In exchange for their services, the real estate agent charges you a fee that’s a percentage (usually 6 percent, but it can vary for other agents) of the house you just bought. This is usually split between your agent and the agent of the person selling the house.

The tricky part here is trusting that your real estate agent has your best interests at heart. The bigger the house you buy, the bigger their fee. Some real estate agents with shady business practices may limit the houses they show you to more expensive listings to get a bigger fee. 

Not everyone needs a real estate agent to buy a house, though. If you already know a person selling their home and you’re willing to put in the effort of handling the paperwork yourself, you don’t need a real estate agent to finalize the deal.

To be safe, it’s best to save up around 20% extra of your house budget to pay for these additional costs. That way, you won’t be overwhelmed by the additional costs that start to build up when you buy your first home. 

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