10 Expenses to Consider Before Buying a Home

Buying a home doesn't just mean coming up with a monthly mortgage payment. It also means covering other expenses, from up-front costs to ongoing ones. Here are a few to keep on your radar if you're looking to become a homeowner.

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Property taxes are an unavoidable part of homeownership, and they have the potential to rise over time. Make sure you can swing those taxes before buying a home, and check out the property tax history of any home you're looking to buy so you can get a sense of how often they tend to increase.

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Homeowners insurance is a requirement for getting a mortgage, and it's also a necessary thing to have when you own property. The cost of your insurance policy will hinge largely on the size and location of your home, as well as its features (a swimming pool, for example, will generally result in higher homeowners insurance premiums). You may also need flood insurance as a separate policy depending on where you buy.

When you rent a home, it's your landlord's responsibility to perform all matters of upkeep. When you buy a home, that responsibility falls on you. Make sure to account for the cost of having your lawn mowed, your snow removed, and any other ongoing expenses that are required to keep your home in good shape.

You never know when something in your home might break, whether it's a minor issue like a leaky faucet or a major issue like a busted heating system. Be sure to budget for home repairs, and pad your emergency savings so there's money to cover unexpected bills.

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When you rent a home, the amount you pay your landlord will sometimes cover utility costs. When you own a home, your mortgage won't include things like electricity, heat, and water, so you'll need to budget for them separately.

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When you buy a property in a homeowners association (HOA), you'll be on the hook for monthly fees or dues. These will help pay for common area maintenance and other amenities, but you'll need to make sure you can swing those fees on top of your mortgage payment.

If you don't make a 20% down payment on a conventional home loan, you'll be charged private mortgage insurance, which is a premium you'll generally pay monthly on top of your mortgage payment. You can shake private mortgage insurance eventually once you've paid down enough of your mortgage, but until you do, expect it to eat up some of your income and divert money away from other things, like your retirement savings.

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When you take out a mortgage, there are fees your lender will charge to finalize that loan. Closing costs generally equal 2% to 5% of a given mortgage's value, so make sure you have that extra money to bring to your closing. If you don't, you may have the option to roll your closing costs into your mortgage, but that will make your monthly payments more expensive.

If you buy a home that's bigger than the space you're used to living in, you'll need to furnish it. Even if you're willing to do so on a budget, furniture is expensive, so be sure to set funds aside for it.

The home you buy may not be in top shape at the time you move in. If that's the case, prepare to spend some money on renovations, whether it's something minor like replacing worn carpeting or something major, like redoing your kitchen.

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Buying a home is a costly undertaking, and one you need to prepare for. Before you buy, think about the added expenses you'll incur and how they might impact other financial goals of yours. If you're currently in the habit of investing every month, you may have less money on hand to buy stocks with once you close on your mortgage. Make sure you're OK with that before moving forward, because in some cases, it could pay to hold off on homeownership until you're in a stronger place financially.

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