Ask an Agent: What Additional Costs Should I Prepare for Aside from the Purchase Price?

The saying I like to use with buyers is that your purchase price (including your down payment) is just the headline, and all the other costs are the fine print. You should always know the fine print before you go into the home-buying process. You'll have closing costs and inspections, which could include multiple inspections, such as termite, pest, roof, and pool inspections. These are all things that you need to be prepared for on the cost side. You'll also have an appraisal and a survey. In some markets, we have transfer taxes, and those can surprise buyers if they're unaware they exist in their market or state.

You also need to have a really good conversation with the lender that you've chosen, because they might require prepaid interest up front. They might require additional items, such as escrow reserves for your homeowner's insurance, and may want them in advance. You also need to be prepared for possible moving expenses or utility deposits. Furthermore, you might need to pay for minor fixes in the house that weren't part of the home-buying process.

I think it's the expenses after moving day that catch people off guard more than anything. Have a good, solid conversation with your lender so you know exactly where you stand before you close. This will vary from market to market and depending on the type of property you've purchased, but typically I tell people to be prepared to pay 3-5% of the home's purchase price, excluding your down payment. A good realtor can help you make sure you've got the numbers right.