Buying a Home? Factor in These Forgotten Costs

All serious home buyers should already know about closing costs, the cash needed to finalize a home purchase. Usually totaling between 2% and 5% of the purchase price, this money covers a variety of expenses, including the title, lender, and appraisal fees, that are required to sell a home. As part of your financial preparation for buying a home, you probably budgeted for these official closing costs; however, there are several additional expenditures which are commonly overlooked by otherwise well-prepared home buyers. Keep reading to learn about these forgotten costs so that they don't end up busting your budget!

Think you have enough cash for any extra expenses? You might want to double-check. A survey by TD Bank found that more than half of homebuyers were charged with over $2,000 in unplanned costs, while 10% faced a bill at least $5,000 over budget! With that in mind, here are four of the most common sources of unexpected homebuying costs.

1. Inspection Fees

Hopefully, you're planning on having a home inspection before signing on the dotted line. Although this process costs a few hundred dollars, it can prevent you from being stuck with tens of thousands in repair costs after the sale.

2. Extra Closing Costs

The actual closing will often cost more than the official "closing costs". Lenders often require you to pay a year's taxes upfront, and buyers will sometimes need to pay back the seller a prorated amount of any prepaid taxes or homeowners' association dues on the property. These charges will obviously vary greatly from home to home but can cost several thousand dollars.

3. Moving Bills

It seems obvious, but many prospective homeowners fail to budget for the cost of moving. The exact amount depends on numerous factors, such as distance, amount of stuff, and location, but it can reach into the thousands if you hire professional movers. The costs will be lower (but not nothing!) if you move everything yourself, but it will still take considerable time, gas, and probably a truck rental.

4. Immediate Expenses

Even after you've moved into your new abode, you shouldn't let your financial guard down. Relatively small fees such as changing the locks and setting up the utilities might not be large on their own, but they can pile up. In addition, even with a clean inspection, you should keep funds on hand for at least one major repair in the first year. In general, professionals recommend that homeowners maintain a 6-month emergency fund to prevent going into debt over a roof repair, furnace replacement, or similar disaster.

Read more about some of the most overlooked homebuying expenses on CNN Money.