Mortgage California Blog

Costs of Home Ownership You May Not Know

July 16th, 2015

New HomeownersIt’s been a long journey. First, you cleaned up your credit report and now have a great score. Then you talked with a reputable mortgage loan officer and a real estate agent to find out how much house you could afford to buy. Now it’s time to get real about how much you can truly afford to buy. Often new buyers only look at the cost of the house. In today’s post, we’re going to shine a light on the hidden costs involved in buying and owning a home.

Closing the Sale

There are a lot of closing costs involved in buying a home including home inspection costs, survey costs, and escrow fees.

A list of fees you’ll also pay at closing:

  • Government recording charges: The cost for state and local governments to record your deed, mortgage and loan documents.
  • Appraisal fee: The cost for an appraiser to decide how much your house is worth.
  • Credit report fee: Your lender had to pay to get your credit report; you cover the cost.
  • Title services and lender’s title insurance: Fees related to your home’s title.
  • Flood life of the loan fee: The government tracks changes in your property’s flood zone status; you’ll pay a small fee.
  • Tax service fee: Another pretty minor fee; This service ensures the taxes previously paid on the house are up to date.
  • Lender’s origination fee: This charge for processing your loan application can be pretty pricey.

It’s worth noting that these costs aren’t exactly hidden. They’re routine and legal, and these days, they’re more visible than in the past.

You may also have points on your loan that need to be paid at the time of closing.

You may also need to pay notary fees, document prep fees, pest inspection fees, state recording fees, and tax service fees. Talk with your mortgage broker and real estate agent about these. Some may be negotiable.

If you paid less than 20% of the home’s price in a down payment, you will be required to take out a private mortgage insurance policy (PMI). When you hit 20% equity, you can request to have this removed. However, you will need to factor it in to your estimated monthly costs.


This will cost more than you expect. The cost is higher if there’s brickwork and older electrical, heating and plumbing. Insurance also checks your credit scores periodically and raises you rates based on their assessment of risk level. Here in California, we also have to consider earthquake insurance which can cost as much as the home insurance. If you’re in a flood zone, you’ll pay extra. Contact insurance companies for quotes.

Property Taxes

Find out what the taxes are in advance, divide by 12 and add to your estimated monthly payment. And remember, taxes go up every year.

Moving Costs

Are you going to hire movers? Will they be packing up your stuff? Even if you do all your own packing and rent a truck, you’ll need to factor in the cost of boxes and pizza to thank those friends who help you load and unload the truck


Your utilities will be more expensive in a larger home. Chances are you were already paying for telephone, gas and electricity. Now you may need to add in water and garbage. You can ask the seller for prior utility bills to get an idea of about how much you’ll be paying.


If you don’t want to take care of the yard, you’ll need to hire someone. Ask your potential new neighbors who they use and about how much. If you want to take care of your yard yourself, you will need to look into purchasing a lawnmower and hedgeclippers and any other additional tools to keep your yard looking at its best.

HOA and Condo Fees

If you’re moving into an area that has a homeowners’ association, be prepared to add that into your monthly expenses. Ask your real estate agent to find out what the costs are and what it goes towards. Often, it’s for items like repaving roads and parking areas as well as repainting houses. If your housing subdivision has a pool clubhouse or a golf course, the fees often go towards the maintenance of that.

Home Maintenance

This will vary based on the age of the house and what the prior owners have done. But find out how old the roof is and figure out when you will have to repair or replace it. The same goes for plumbing and appliances. And there’s always a million little things like replacing furnace filters, caulking doors and windows, cleaning the chimney, fixing a leaky toilet, cleaning gutters, re-staining the deck, etc. etc. And light-bulbs will go out. The new LED bulbs save energy and last for decades, however, they are an investment up front.


You will use more cleaning supplies in a larger home. If you hire a cleaning service, the cost will be more than with a small apartment.

Rewiring the House

If you want your cable or phone lines to go to another room, you’ll need to pay for someone to fish the wire through the walls. If you want an electrical outlet somewhere else, you will need to hire an electrician, and then someone to repair the drywall and repaint.

Doing It Yourself

Unless you’re an expert and have actually done the upgrade yourself, be prepared to have to hire someone to come in and fix or finish what you started. And budget time for the stuff the professional finds when he’s fixing something else. Even if you’ve budgeted to hire someone to do a remodel before you move in, they will find more that you didn’t expect (i.e. dry rot) that requires more money and time.

It’s ok to learn and to practice. Just don’t plan on getting it done quickly until you’ve gotten a lot of experience. Here’s a fun video on how to create your own LED light fixtures just to get you thinking of the possibilities.

Safety Features

Many people are adding in motion-detecting lights and camera systems around their home. You may also want to add in additional lighting around a footpath to reduce accidental falls.

Pest Control

This is something else you never had to worry about when renting. If you have termites, cockroaches, mice, bats, or other creepy crawlies,  you will need to hire an exterminator to remove the problem, and fix any holes into your house.

Perceived Savings

You hear about saving money with energy saving appliances, programmable thermostats and new windows. But to save the money, you’ll have to spend a lot first. The same goes for solar panels. It may pay off in the long term, but be prepared for a large initial cost.

Emergency Fund

Before, your fund only had to cover rent and other expenses. Now you need an emergency fund to cover a lot more.

Making the House Your HomeBeautiful colorful shelves

This is the tough one. You just bought your dream home and want to start putting in new furniture and decorations. You either need to have money set aside, or you need to agree to wait. Generally, it’s better to wait and get the feel of the home first before adding in new items. Plus, you have time to get over the sticker shock of what you paid to buy it.

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