10 Sneaky Home-Buying Costs

There may be no bigger blow to your personal finances than buying a home. This isn't to say it isn't worth it, because for many people, it is. The Zebra notes that around two-thirds of Americans own their home, so despite the costs, an awful lot of people have taken the plunge on homeownership.

You're likely familiar with the down payment aspect of buying a home. And you might be intending to put down 20% (not a requirement, but a recommendation, so you can avoid paying for mortgage insurance). So you may already be wincing at the prospect of pulling so much cash out of your savings account. Unfortunately, your costs don't end with that down payment. Let's take a look at some other home-buying costs you may not have considered.

1. Lender fees

The odds are, your mortgage lender will be getting some money from you in the course of your home-buying experience, even before you start paying on your mortgage. This will come in the form of lender fees, which could include a mortgage loan application fee, origination fee, processing fee, and underwriting fee. These are what you'll pay for the lender to consider your mortgage application, run your credit, dig into your personal finances, and otherwise set you up for borrowing success. These fees can come to 1% to 2% of your loan amount.

2. Earnest money deposit

Ready to make an offer on a home? You may have to make an earnest money deposit to prove to the seller that you're serious about buying their home. Ideally, if the deal goes through, your earnest money will be rolled into your down payment, so you'll be paying that money eventually. But for first-time home buyers, it may be a surprise that they need to shell out a percentage of the home's value in the course of making an offer.

Realtor.com notes that earnest money is usually 1% to 2% of the home's purchase price, but it's also negotiable between buyers and sellers. In a hot seller's market, you may have to put in more to get your offer considered.

3. Appraisal fee

It's time to get that home appraised to ensure it's worth at least as much as the mortgage lender is willing to give you to buy it. So that means an appraisal fee. HomeAdvisor reports that this generally costs an average of $353, but depending on the condition and size of the home and whether it's had significant upgrades, it could cost more.

4. Mortgage points

Want a lower mortgage rate than your lender offered you? You might consider paying for mortgage points. This is a way to reduce or "buy down" your mortgage interest rate by way of an upfront fee. This is an optional cost, but you may want to consider it, especially if you're planning to stay in the home for a long time and the upfront cost will pay for itself by allowing you to make smaller payments over time.

Often, one point equals a rate reduction of 0.25%, and one point will cost 1% of the total loan amount. So on a $300,000 home, you can pay $3,000 for one point, and reduce your interest rate from, say, 4.75% to 4.50%.

5. Fees for government-backed mortgages

While you will have the chance to save on your down payment by opting for a government-backed mortgage, you'll have to pay in other ways that you may not be expecting.

• FHA mortgage loans: FHA mortgages require as little as 3.5% down (if your credit score is at least 580), but you'll have to pay for mortgage insurance premiums in the form of an upfront payment as well as ongoing monthly payments.
• USDA mortgage loans: If you live in a qualifying rural area and have an income below a certain threshold, you could opt for a USDA home loan. You may be able to get into a home with this loan for little or no down payment, but must pay an upfront and then annual guarantee fee.
• VA mortgage loans: VA home loans are a perk for veterans or active-duty service members. These loans don't require a down payment, but they have an upfront funding fee.

6. Home inspection

Once you have an accepted offer, you'll be ready to get your prospective home inspected, and yes, this will cost money, too. Realtor.com reports that the average cost is between $300 and $500, but just like the appraisal fee, this could cost more depending on the size and intricacies of the home. Don't skip this, as it's also for your protection. And if your original inspector notices specialized problems, you may need to pay for more than one.

7. Flood determination

Standard homeowners insurance doesn't cover flooding, so depending on where the home is, you may need to purchase a separate flood insurance policy. So your lender may require you to shell out money for a flood determination, which will assess your home's risk of flooding based on FEMA flood maps.

8. New appliances

This one may not apply to you, if the previous owners are leaving all their large appliances, like the washer and dryer, stove, and refrigerator. But if they're not, and you don't already have your own that you'll be moving in with, you'll have to purchase these items. You could consider buying them at Costco or another big-box store to save money.

9. Moving costs

Moving from your old home to your new one won't be free. You may not have considered the costs involved in moving, but it pays to plan ahead and set aside some cash to pay for a van or truck, boxes and other supplies, and potentially even movers, if you can afford to. Moving is stressful enough emotionally and mentally without adding in the physical stress involved.

10. Miscellaneous things you need right now

I have moved many, many, MANY times in my life (35 times, at last count). And I can confidently say that you absolutely will need to purchase items for your new home pretty much immediately. You'll move in and realize that the showerhead is in terrible shape and you need a new one. Or you won't have the right size/type of window coverings for your new home and have to run over to your local big-box hardware store for venetian blinds so the neighbors can't see into your bedroom. I recommend using a cash back credit card for these expenses.

It doesn't seem fair to have to shell out so much money along the way to becoming a homeowner, but once you're all moved into your new home and building equity, it'll all be worth it. In the meantime, make sure you consider all these sneaky expenses when attempting to calculate how much it'll cost to buy a home.