Rookie Home Buying Expense Checklist

Be Aware and Prevent Unexpected Costs

Rookie Home Buying Expense Checklist
January 23, 2020

After years of saving, you are finally ready to buy a house — but have you really saved enough to buy the house that you want? There are more expenses to consider than just the price of the home, and first-time homebuyers can be caught by surprise at the number and size of the auxiliary expenses. Don’t let this happen to you. Review this checklist to make sure you understand the total costs before you decide on the size of home to buy.

  • Down Payment – A standard down payment is 20% of the purchase price, but other offers may be available depending on your credit status and eligibility for programs. A lower down payment is not always desirable — keep in mind that a lower down payment equates to greater interest costs over the course of the loan. You always have the option of scaling to a smaller home so you can afford to pay 20% down.
  • Private Mortgage Insurance (PMI) – PMI is another side effect of a low down payment or other risky loan terms. Generally, with a lower down payment, PMI will be required by the lender to accommodate the higher risk. PMI is often included in the monthly mortgage payments, but could be included as an up-front charge depending on the level of risk you pose.
  • Homeowner's Insurance – You will need proof of homeowner's insurance and typically have deposited money for the first few payments before your home purchase can be completed. Aside from just being a smart idea, insurance is required by the bank to show you intend to take care of the home and are thus a good bet to repay the loan.
  • Taxes – Check the property tax rate for the new home. Local rates vary significantly depending on school and fire district levies. You may owe the previous homeowner for some portion of fees already paid. Also, consider other specific neighborhood fees such as homeowner's association fees and maintenance fees for neighborhood amenities like pools and landscaping.

  • Earnest Money – Earnest money is placed in escrow along with an offer to show serious intent to purchase the home. Typically, it is a few percent of the cost of the home. While this is not a separate expense — it will be applied to a down payment or closing costs and you will get it back if the sale doesn't go through — it is important to remember this expense for cash flow purposes.

  • Maintenance Costs – First-time homeowners often forget how all the little things add up with home maintenance, especially at the beginning when you may need to purchase things like lawn care equipment and household tools. You can easily spend 1-2% of your home's purchase price in the first year.
  • Appliances/Furnishings – Milk crates and a mattress on the floor were fine in the early days, but now you have a home that you need to fill with furnishings and possibly new appliances. Starter homes often have older appliances and dated décor that need replacement. It is easy to underestimate the costs without making a list and pricing individual items or projects. You may be shocked at the final number.
  • Closing Costs – A bewildering variety of fees show up at or near closing, including appraisal fees, survey costs, title insurance, home inspection, attorney's fees, recording fees, and any points (an upfront payment that lowers your interest rate). Fortunately, the Consumer Finance Protection Bureau (CFPB) has mandated that closing documents more clearly outline the individual costs. An online example may be found at the CFPB website.
  • Moving Expenses – Depending on how far you are moving and how much stuff you have to move, moving expenses can be significant. Any time you have to hire professionals you need to carve out room in the budget, and you will probably have to buy at least your friends’ snacks and meals if you are moving on the cheap.
  • Monthly Bills – Do not forget about the monthly bills of electricity, gas, water, and any fixed telephone or cable TV/Internet connections. There are likely to be setup installation charges that can cause temporary cash flow problems.

It may seem overwhelming, but there are plenty of resources available to you as a new homeowner, both online and in person. Take advantage of these resources, plan your purchase, and familiarize yourself with the typical costs, and you can enjoy a smooth transition into home ownership — at least as smooth of a transition as possible.

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Erin | 10.02.15 @ 16:01
Great checklist of things you need to account for before buying a home. I would have appreciated having a list like this when we bought our home.
Clarissa | 10.02.15 @ 16:01
This article is just what I needed! I have been planning on figuring out how to buy a house and there are several things in here I didn't know. Thank you :)
Chrisitna | 10.02.15 @ 16:02
I've done my research :) This is a good checklist to start with, but there are other things to think about as well. Some loans offer no, or lower, down payments, and some state programs offer homebuyer assistance with the downpayment :).
Steffanie | 10.02.15 @ 16:02
A great checklist for those buying their first home. There are so many costs that you forget or just don't think about. It can be overwhelming.
Daniel | 10.02.15 @ 16:04
First time buying can be overwhelming. Great idea to have a checklist and these are excellent items to be sure are on it.
irene | 10.02.15 @ 16:05
Very thorough checklist, what a great article..
Sara | 10.02.15 @ 16:06
Wish this was around when we first bought our house.
Bobbie | 10.02.15 @ 16:07
Good refresher as we will be moving in a few years. Totally forgot to check out the property taxes in the areas we are looking to move to.
Angie | 10.02.15 @ 16:10
These would have been great things to know when we were buying our home.
Carla | 10.02.15 @ 16:13
I wish we would have had this checklist when we bought our home. Passing this on to my son.
Kathryn | 10.02.15 @ 16:14
Love this! We used a similar method when we bought our new home two weeks ago!
Nancy | 10.02.15 @ 16:16
Yes! Oh, how I wish I had this list when I bought my first home. There is so much more to buying a home than just acquiring a loan. So, many expenses that I never considered. My home had no window coverings and that alone was an expense that was more costly than I expected.
Owen | 10.02.15 @ 16:18
Great checklist... just remember to plan for the unexpected.
Rindy | 10.02.15 @ 16:22
When bought our home 25 years ago it would have been great to have a list like this. We just stumbled through it.
Sarah | 10.02.15 @ 16:22
What a great resource! Very well done.
Kamie | 10.02.15 @ 16:37
This lists things that not many people even think about and then get hit with after buying a house, and find out that they can not actually be a long time home owner.
Meredith L | 10.02.15 @ 16:38
Being on my second home, I can tell you, you must account for EVERYTHING - from spending money, movies, fuel for your car and all the extras you don't think about when purchasing a home. This is a great list but don't forget about your entertainment budget too.
Selena | 10.02.15 @ 16:42
Very useful to first time buyers.
Ron | 10.02.15 @ 16:47
And also do not forget the home inspection report and what costs may come from there.
Britt | 10.02.15 @ 16:54
This was very informative.
Jennifer Sears | 10.02.15 @ 16:58
This is information I'll keep in mind when we start house shopping.
Ambar | 10.02.15 @ 17:11
Great list. Also, condos charge a monthly maintenance fee for things such as window cleaning, snow shovelling, housecleaning, gardeners, and so on.
Heather | 10.02.15 @ 17:13
This is a great list and very important expenses to remember when you are looking to purchase a home.
Jo Ann | 10.02.15 @ 17:24
This is a great checklist. It give many good ideas when figuring out the affordability of a home purchase's hidden costs. We often forget about the extra's that we need, furniture, internet and home owner's insurance.
Blake | 10.02.15 @ 17:27
I knew about most of these expenses but seeing them laid out in a list is a little overwhelming. It's astonishing how much buying a home can cost and the expenses that come before and after.
Zanna | 10.02.15 @ 17:38
I could have used this before we bought our house. Great resource, bookmarking it for the kids!
gracie | 10.02.15 @ 17:46
I am not sure I will ever buy a home but this was a great list of things to keep handy if I ever do!
Kyle | 10.02.15 @ 17:47
Excellent article with great tips.
Tina | 10.02.15 @ 17:49
Yes, definitely! Your mortgage isn't everything. And buying a cheaper house usually means higher maintenance. Fantastic list.
Kailie | 10.02.15 @ 17:50
Great article. As someone looking to buy a house soon, this was great.
Chelsey | 10.02.15 @ 18:14
I am one of those people that researches everything to death before making decisions. I always have to know what my bottom line cost is going to be before I shell out money. Home buying is one of those things where I know it will cost more money than I anticipate. This was a very informative article.
Amanda | 10.02.15 @ 18:14
Very nice list to consider, I bought a house about 12 years ago, and remember the worry and frustration when all the costs of items added up. If the house cost $100K plan on having at least $150K saved up or at least in budget.
Vaughn | 10.02.15 @ 18:38
People think renting is throwing money away but I beg to differ.
$commenter.renderDisplayableName() | 11.29.20 @ 13:33