There shouldn’t be any hidden costs

When you buy a house there shouldn’t be any hidden charges, but there might be some surprises during the homebuying process. Here are a few that catch some home buyers off guard.


Closing costs can come as a surprise. Your lender will ask you to get and pay for a year’s worth of homeowners insurance upfront.(the national average for home owners insurance is $2305 a year) Lenders will collect one 12th of the amount of property taxes and homeowners insurance and pay the bills the next time they are due.

You will pay real estate taxes from the day that you close until the end of the month. You may also pay a partial month of mortgage interest and if buying a condo you may pay a partial month’s worth of association dues.

If you work with a real estate agent from one of the larger real estate companies you will pay a fee of around $500 dollars to the real estate company.  There is usually a fee for the closing and there are fees for title searches and credit checks too. Some lenders will charge for the appraisal upfront before the closing.

Most home buyers are well aware that they need a down payment which is also usually due at closing. Mortgage lenders include closing costs in their good faith estimates. Borrowers are given a full list of charges before the closing. There should never be a surprise charge at the closing.

Once you buy a house there may be some more unexpected costs. I always tell people who are buying older homes to start an emergency house fund. Things break and they wear out too. Start the fund with $500 and add $25 a month to it every month.

There are programs that provide funds for down payments and closing costs. I have had a few home buyers take advantage of these programs.  There are other options too. Let your lender know you are a first time home buyer.

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