The Sarmiento Team Real Estate Blog/buying/What are the expenses for buying a home?

What are the expenses for buying a home?

Monday, February 20, 2023

Many people get excited at the prospect of owning their own home. Buying a home can be fun and exciting! So exciting that sometimes they overlook the many expenses that  are part of buying a home. Both at the start and on an ongoing basis.

So some expenses are going to be paid up front and others will be ongoing as long as you own your new home. In which case they can have a significant impact on the actual amount you will have to pay each and every month.

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Expenses Associated with the Purchase

Home Inspection ($500-$700)

Once you have an accepted offer, your next step is to have an inspection done on the home. Every house should be inspected to make sure there are no hidden issues that can end up costing you big time once you move in. The average price is around $600 in the US.

Deposit (This can vary, minimum $10,000 and standard is 10% of the sales price)

You will be asked for a deposit when you sign a contract to buy a home. It will usually be part of your total down payment. It should be refundable if you are not able to get a mortgage for your home

Appraisal Fee ($600-$700)

If you are getting a mortgage, the bank will want you to have an independent 3rd party appraiser evaluate the value of the home you are buying. An appraiser will give you a full detailed report with an appraised “value” of the home, which is the amount of money the bank will feel comfortable lending on. If your home appraises for less than the sales price you may have to renegotiate the terms of the sale in order to buy the home.

Title Deed Search and Insurance (1% of the sales price)

The paperwork pertaining to the legal aspects of the property and its sale will be billed as part of the work a lawyer will do on your behalf to make sure the sale goes smoothly. The most important things are to be sure of the extent of the property, the right of the person to sell it to you, and any reasons why the house might not be eligible for sale – such as because it is located in a FEMA Special Flood Hazard Area (SFHA). This can hold up the whole sale, and/or require you to take out special flood insurance.

Homeowner’s Insurance (May vary $1,500-$2,500 Annually)

This will usually be required by the lender. In most cases, they will want to escrow the insurance payments to make sure it is being paid for as part of the monthly payment. Homeowner’s insurance will cover the property in case of an accident such as a fire or damage from a severe storm.

Private Mortgage Insurance (PMI) (Approximately 1% of the loan amount paid annually)

Most lenders require that you take out insurance if you are going to borrow more than 80% of the price of the home. Private Mortgage Insurance will protect the bank if you don’t pay back the mortgage and you borrowed more than 80% of the value of your home. This will usually be rolled into your monthly repayment.

Total Down Payment

At the closing you will be required to bring in the balance due to complete the entire down payment.

Closing Costs

There are a number of costs associated with completing the sale and purchase of the home, commonly referred to as closing costs. These can include:

  • ​Real estate attorney fees ($1250-$2,000)
  • ​Mortgage processing fees ($1,500-$3,000)
  • ​Title deed fees ($250-$500)

These costs will be payable on the day of the closing. Experts suggest you save 2% to 5% of the purchase price of the house so you don’t get hit with sticker shock.

Appliances (Varies)

Some home sellers will leave appliances items behind. Others will take their appliances with them, so be sure to include the appliances you want to keep in the contract you sign. Be sure to factor in these extras as needed.

Moving Fees (Varies)

A lot of people forget to factor in the cost of moving and/or storage once you buy a new home.

On Going Expenses for Owning a Home

Property Tax

Everyone pays taxes! County, taxes are paid quarterly and are usually escrowed into the monthly mortgage payment.

Water Bill

In our market (Bronx and Westchester NY) most homeowners get a water bill every three months. Depending on the usage, the average water bill for a single family home is around $400 a quarter.

Gas and Electric

Don’t forget you will still have to pay a monthly utility bill for gas and electricity. In our market we pay Con Edison.

Heating & Cooling

How is your home heated and cooled? In our market most homes are heated via gas or oil and most are cooled with electric window or wall air conditioners. In the winter this means added costs for heating and in the summer this means added costs for cooling.

Renovation & Repairs

If you plan any major changes to your new home such as painting or decoration, set aside money for your projects.

Also, one of the most important things you have to budget for is future repairs. Homes will need repairs in the future, it’s best to set aside a budget for future repairs early so you are not caught by surprise.


While owning a new home can be fun and rewarding, it’s very important to fully understand all the expenses associated with owning a new home. If you have any questions or need anything else, feel free to reach out to us, we are here to help you.

Take care, and let’s talk soon.

The Sarmiento Sales Team

Andy, Damaris & Walter Sarmiento

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The Sarmiento Team

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