If you’ve been dreaming of owning a home with a stable income that allows you to afford the monthly payment, you may feel it’s finally time to start searching for that perfect, or near-perfect, place. 

But what many prospective homeowners don’t consider are the expenses of owning a home that may not be so obvious, the ones that go beyond that mortgage payment. As this is a major financial commitment, it’s critical to understand all of the costs involved. Surprise expenses can put a wrench in a wrench in anyone’s budget that can make owning that home a nightmare rather than a dream.

Before you decide to buy, be sure to calculate these hidden costs of homeownership. 

Closing Costs

You probably know that you’ll need to come up with a down payment, but on top of that, there are closing costs. Once your purchase is complete and you sign those final papers, there’s a laundry list of additional fees to pay. 

Closing costs typically include legal fees, title insurance, taxes and insurance escrow payments, recording fees, and lender application fees. If you put less than 20 percent down you’ll have to pay for private mortgage insurance (PMI), and your lender may ask you to pay the first month’s premium too. Typically, you can expect to pay 2 to 5 percent of the amount of the loan. 

Property Taxes

In addition to your mortgage payment, you’ll have to pay property taxes. While some lenders are willing to roll them into your monthly payment, it’s important to understand this additional cost when determining your budget.

Property taxes can vary dramatically by state and even the city in which the home is located, ranging from just a couple of hundred dollars to $10,000 a year. When searching for a home online, an estimate of the property taxes is usually provided on the listing. If you don’t see those details, your real estate agent can find out.

Maintenance and Repairs 

It’s very difficult to predict how much to budget for repairs. Keep in mind that everything is aging, from the appliances to the roof, plumbing, and foundation. Eventually, you’ll have to make repairs or replacements. While the costs are unlikely to be incurred all at once, or even over the course of a year, you’ll need to set aside enough in advance to cover those expenses when it becomes necessary. 

The older the home is, the greater the chances of repairs being needed in the near future. While some older houses may have structural problems that aren’t uncovered during the inspection, the biggest hidden costs are usually things like an old roof or a 20-year-old water heater.

Utility Bills

If you move from an apartment into a home, your square footage will probably increase. It costs more to heat and cool a larger space, which means higher utility bills. Even if you were renting a home, you may have to pay more as oftentimes landlords cover costs like water and garbage pickup. 

Don’t forget to include these costs when budgeting. And, when touring homes, remember the larger the living space, the higher those costs will be. 

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The Costs of Selling

If you find yourself having to move, you’ll have to pay closing costs which include real estate agent commissions and transfer taxes and fees. That will come out of any profits you make from the sale, assuming it sells for more than the balance remaining on your mortgage. You can determine the amount by using a seller closing costs calculator, but that typically range from about 6 to 10 percent of the sale price.