15 Costs to Prepare for When Buying Your First House

Buying your first house is a major life milestone. It can also be a great financial decision if you're ready for it.

The key, however, is to make sure you're fully prepared for all the new expenses that come with homeownership. Many first-time buyers aren't aware of all the costs that arise, so here are 15 expenditures that you should ensure you're ready for.

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Homebuyers have the chance to reduce their mortgage interest rate by paying for "points" up front. Each point typically costs 1% of the amount borrowed and reduces your rate by 0.25%.

With mortgage rates climbing, you may want to pay this up-front cost to lower your future interest expenses. But you'll need to have the money ready to do so. This can mean spending thousands of dollars out-of-pocket on the purchase of your home.

ALSO READ: What Are Mortgage Points and How Do They Work?

Closing costs include the expenses you must pay when ownership of the property is transferred to you and your mortgage loan is finalized. They typically add up to around 2% to 5% of the home value and can include things like appraisal fees, transfer taxes, and mortgage origination fees.

It's important to be prepared to pay these expenses before moving in since you can't transfer ownership of a home without paying them.

Some lenders will allow you to borrow to cover the closing costs, or they'll cover the costs for you in exchange for a higher interest rate. But either of these options would raise your costs going forward, so they should ideally be avoided.

A move can be very expensive, especially if you are relocating far from your current residence or hiring professional movers to take care of the move for you. And the more items you must move, the greater the expense in most cases.

On the other hand, if you don't have a lot of stuff to move because this is your first home, you may not need to worry as much about moving expenses -- but may face high bills to furnish your new home instead.

ALSO READ: 7 Hidden Expenses You'll Face When Moving

Unless you are paying cash for your new house, you'll need to get a home loan. So, you need to budget for monthly mortgage payments.

You'll have to pay both principal and interest when you borrow to buy a home. The amount of principal you must pay each month is based on how much you borrowed and how long your loan term is. You must pay off your loan in full by the end of the term, so the payment is calculated so that your balance falls to $0 eventually.

Interest is the added cost to borrow, and it's determined by the rate you're charged and the amount of your loan. It can add a lot of money to your monthly payments, especially early on when you're paying interest on a large sum.

Many first-time homebuyers struggle to make a large down payment. Unfortunately, if you do not put down 20% of your home's value, you will likely have to pay private mortgage insurance (PMI).

PMI is another monthly cost to budget for, and it typically costs between 0.5% to 2.00% of the total amount borrowed. PMI exists to protect lenders and ensures they don't lose money if they foreclose because you don't pay. Although it doesn't directly benefit you, to get approved for most loans, you'll have to cover the costs of it if you put down too low a down payment.

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Property taxes are a big added expense you will need to pay. You may not plan for these costs as a first-time homeowner as chances are good your landlord has always simply covered these costs for you.

Depending on where you live, property taxes can add thousands of dollars to your home's cost. Many mortgage lenders require you to include payment toward them as part of your monthly bill. But even if your lender doesn't, you need to be prepared for this huge annual expense.

ALSO READ: What Goes Into Calculating Your Property Tax Bill?

Homeowners insurance protects the investment you make in the home. It's generally also required by lenders and can cost thousands of dollars each year.

As with property taxes, you may be required to make payments toward your home insurance as part of your monthly mortgage payment. But again, even if your lender doesn't mandate this, you'll want to save up the money to cover homeowners insurance premiums so that you can get the proper protections in place.

Some, but not all, neighborhoods have a homeowners association, or HOA. And these HOAs can charge fees that are sometimes substantial. You'll need to make sure to budget for them and pay the fees on time to avoid financial penalties or other serious consequences.

ALSO READ: HOA Fees: What Are They and What Is Covered

Your home will likely require a surprising amount of ongoing maintenance, especially if you have never been responsible for taking care of a property before.

For example, you may need to change your HVAC filters regularly, have your heating and cooling equipment serviced annually, change light bulbs a few times a year, and perhaps cover the costs of water treatment if you don't have city water.

These ongoing expenses can add up, and many first-time buyers aren't prepared for this added cost.

When things break in your home, you're also responsible for repairing or replacing them. There's no landlord to call to take care of this for you.

Many experts recommend budgeting around 1% of your home's cost annually for home repairs. Even if you have no major issues over the course of one year, setting aside this money helps to ensure you're prepared if a big fix is needed -- such as a new roof.

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Your utility costs may be higher as a homeowner than they were before. These costs can include gas, electricity, water, internet, phone service, garbage pickup, and more.

If your new house is larger than your previous rental or your landlord covered some of these costs, you need to be prepared because you could find yourself paying substantially more.

ALSO READ: These Charts Show Where Electricity Costs Are Rising The Most

If your home has gutters, you'll have to either clean the leaves out yourself or pay a professional. Because gutter cleaning can be a difficult and dirty job, typically requiring you to climb on the roof, DIY-ing it may not be an option.

Many non-homeowners don't realize gutter cleaning is necessary and expensive, so don't get caught off guard by an annual bill that costs hundreds of dollars.

If you live in a cold climate, you'll face additional expenses for snow removal. Unless you are prepared to get up and plow snow or shovel your driveway before work, you could pay hundreds of dollars a year to a plowing service.

Take this cost into account -- especially if you're buying during the summer, so the expense won't come right away, or you're used to your landlord handling this task for you.

ALSO READ: These Overlooked Home Maintenance Costs Can Add Up to Thousands Per Year

While you may get a break from paying for a snow-plowing service, if it's summer or you live in a warmer climate, you'll likely also have a lawn to take care of. And it can be surprisingly expensive to do that -- especially if you hire someone to mow and fertilize it for you.

Many counties and HOAs have rules about lawn maintenance, so you could find yourself spending much more than expected to keep your grass looking good.

Finally, you don't want a home infestation, so you may have to pay a pest control service to come to your home regularly to avoid one. This can be especially important in certain parts of the country where bugs are prevalent year-round.

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If you've never owned a home, it's easy to focus on your mortgage only and not the other costs you'll incur once you do.

By preparing for all 15 of these expenses, you can make sure homeownership truly fits within your budget, so you don't face an unpleasant financial shock when closing on your home or after moving in.

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