12 Hidden Costs of Homeownership

How much cash you’ll really need to buy and maintain a home.


Slide Show: 12 Hidden Costs of Homeownership

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5. Moving expenses. Buyers face an additional wave of costs once their home purchase is complete. Take moving expenses. Unless your new house is around the corner or you have a large group of helpful friends, you'll likely need some professional help to transport your belongings. Such expenses can reach several thousand dollars or more, depending on the distance of the move. "Moving is a significant expense—particularly across the country," says Gail Cunningham of the National Foundation for Credit Counseling. For those moving on account of a job, Cunningham recommends asking your new employer to chip in for some of the costs associated with the transition. "I know that people are probably so excited to get the job that they don't want to rock the boat, but that's a pretty normal question," Cunningham says. "A lot of these companies have standing contracts so it is certainly a question worth posing because you don't want to have to cough up that out-of-pocket expense unnecessarily."

6. Furniture. Once you've lugged all of your furniture into your new property, you may find that your old sofa and dining room table aren't nearly enough to fill out the house. "Maybe [the buyers] came from a one-bedroom apartment and they are buying a three-bedroom house," Cunningham says. "They are really going to have some major expenses just to furnish the house with the basics." The beds, lamps, and tables often needed to furnish additional rooms can add up quickly. "The expense of that can really catch you by surprise," Gumbinger says.

7. Property taxes and homeowners insurance. If you have never had a mortgage, be aware that your monthly bill won't simply reflect the loan amount plus interest. It will also reflect property taxes and premiums for homeowners insurance, which all mortgage borrowers are required to obtain. For that reason, housing experts encourage buyers to think of their baseline monthly mortgage payment as encompassing "PITI," or principal, interest, taxes, and insurance. Annual homeowners insurance premiums typically range between 0.5 to 1 percent of the mortgage loan amount, Gumbinger says. Property taxes will vary a great deal, but can run several thousand dollars a year or more.

8. Supplemental insurance. Consumers who buy homes in areas exposed to flooding may have to purchase a supplemental insurance policy, says Guy Cecala, the publisher of Inside Mortgage Finance. "[For] just about any mortgage you get now that's in the 100-year flood plain, you have to get flood insurance," Cecala says. Buyers can use online tools to determine if the property they are considering is located in such an area. "There is no real cheap private alternative. You really have to get into the federal flood insurance program, and it's relatively affordable," he says. Premiums on such policies will cost most homeowners less than $20 a month, he says.

9. Homeowners association/condo fees. Consumers who buy into certain developments will have to pay an additional monthly fee on top of their payments for principal, interest, taxes, and insurance. Condominium and single-family developments often charge residents for services that benefit the community, like lawn mowing or employing a front-desk attendant. "Condo fees are specifically for condominiums. Home association fees can also be for single-family home developments," Moore says. "They are essentially the same thing but different variations." Such fees will vary, but can total more than $100 a month.

10. Utilities. You may be surprised by how much you'll need to budget to keep your house warm and the water running. "You might have been renting an apartment and you [were] paying some portion of your utilities or maybe all of them, but the first cold winter you are in your house, you [might] say, 'Wow, look at these power bills,'" Gumbinger says. "That's one of the costs I think you really don't think about." Utility costs will vary by region and consumption. To get a sense of the costs, home buyers should ask sellers for monthly utilities estimates before they close the transaction.