4 Major Costs That 1st Time Home Buyers Underestimate

Considering buying a new home? You are in luck. I bought my first home in April of this year. I would ask my friends, family, co-workers, and others about the home buying process. A lot of the answers that I was looking for – especially regarding the cost of home ownership were nowhere to be found.

In order to help you through your journey to homeownership, I decided to discuss the things you need to know if you are considering buying your first home in the next 3 years. To get started, check out these posts:

As you probably know, homeownership isn’t cheap.  Even if you have already taken the 5 steps I mentioned previously to prepare for your 1st home purchase and considered all the 10 costs homeownership, there is a good chance you are underestimating some of the costs.

Check out these 5 major costs that 1st time home buyers underestimate:

4 major costs that 1st time home buyers underestimate

Closing Costs

The first major cost that 1st time home buyers underestimate involves closing costs.  Like the name states, closing costs are fees associated with the closing of a real estate deal.

According to Zillow, home buyers typically pay closing costs that amount to 2-5% of the house purchase price.  Therefore, if your ideal house is $100,000.  Then you can expect your closing costs to be between $2000-5000.  On average, home buyers pay $3,700 in closing costs.

Closing costs is a term that includes a variety of charges.  Some, but not all of the costs include:

  • Appraisal
  • Credit Report
  • Closing or Escrow Fee
  • Underwriting Fee
  • Loan Discount Points
  • Property Tax
  • Processing Fee
  • Underwriting Fee

Closing costs are avoidable, though.  In many situations, the seller will pay the closing costs on behalf of the home buyer.  That actually happened when I bought my first home.  It is important to discuss the seller paying the closing costs when you make your offer on the home.  In addition, your mortgage lender may allow for a no-closing-cost mortgage.  Beware of this option.  Instead of paying closing costs directly, the lender may wrap the closing costs into the mortgage.  Therefore, you end up paying interest on the closing costs which costs more money in the long run.

Home Improvements

The second cost that 1st time home buyers underestimate involves home improvements.  More than a third of home buyers underestimate the cost of home improvements.

Below are the most expensive home improvements:

  • Remodel a kitchen: $19,920
  • Remodel a bathroom: $9,274
  • Build a deck: $6,919
  • Reface cabinets: $6,692
  • Install a roof: $6,626

For example, I dislike the fence at my home.  I figured it would be a quick fix to tear down the existing fence and build a new fence.  Per a homeadvisor survey, most homeowners spend between $1,577-3,700 to install a wooden fence.

Appliances/Furniture + Decor

So, you found a house you love but the appliances don’t come with the house?  Or you would like to upgrade to stainless steel appliances?  It is going to cost you.

An estimate of costs of new appliances include:

  • Energy-efficient dishwasher: $400-600
  • Energy-efficient refrigerator: $800-1000
  • Energy-efficient microwave: $400-600

Although buying new furniture is fun, it is another cost that is underestimated by many first time homebuyers.

Don’t let the “sales” and enticing signs of 0% interest down for 12 or 24 months. Furniture doesn’t become less expensive when the price is spread out over time.

To avoid the sticker shock when buying new furniture and even new appliances, check out your local thrift stores and garage sales. I was able to snag some awesome artwork at a thrift sale. In fact, I bought one painting for $10 and then saw the same painting at a local store for over $40!

Home Repairs

The last major cost that 1st time home buyers underestimate includes home repairs.  No one wants to worry about home repairs but it is inevitable that they will be needed.

Common home repairs and their price are as follows:

  • New Roof
  • Heating/Air Conditioning Unit
  • Replacing Sliding

With home repairs, you never know when they will be needed.  Over time, wear and tear can take over a home.  This is why it is so important that you have a fully funded emergency fund in order to handle the unexpected repairs.  For more information about an emergency fund, check out these posts:


4 Major Costs that 1st Time Home Buyers Underestimate

If you are a homeowner, what advice do you have for those considering 1st-time homeownership?  What costs did you underestimate as a 1st-time homebuyer?


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  1. Tia,

    I just heard you on the His & Her Money Podcast discussing the overlooked homeownership costs and it was an awesome and informational show! I am not a homeowner (for many of the reasons you discussed during the podcast). There were many things you shared that I wasn’t aware of. Even though I am pretty set on renting for the time being, listening to you helped confirm that I am doing the best thing for me. Thanks and happy to have found your blog!

    1. I am so glad you heard the podcast on the His & Her Money Show! It is definitely important to put all of the costs in homeownership into consideration.

  2. I bought my house in 2004 and totally forgot all the costs associated with that. I’ve been lucky that I haven’t had to replace very much. The HVAC when out a couple of years ago and the microwave. Other than that we’ve been incredibly fortunate. With that said, we definitely have an emergency fund for when we need to replace things. Thanks for sharing your current perspective!!!

    1. That is awesome that you haven’t had too many issues with your house. I am keeping my fingers crossed that it will be the same for me. 🙂

  3. I think the biggest issue is underestimating the cost of updates and remodels. Yes, you can go the DIY route, but you will spend a lot of time on those projects (much more than most think). I would even argue these prices are on the low end and would be pretty small kitchens, bathrooms, and decks:

    Remodel a kitchen: $19,920
    Remodel a bathroom: $9,274
    Build a deck: $6,919

    Bottom line: make sure you keep these costs in mind when making a home purchase.

    1. Thanks for visiting, DC! Yes, even going the DIY route can be pricey. I saw on IG that you are doing some home remodeling now. Good luck!

      1. Yes, it’s exciting and terrifying at the same time! I am glad we waited 4 years, though, as we originally wanted to dive into a bunch of big DIY projects. It gave us the time and money to “do it right.” With my side hustles it makes sense to outsource home projects so that I can continue to focus my time on those. At least that’s what I’m telling myself.

    2. I agree with DC – those seem on the extreme low end even if you are doing it yourself! I think the average kitchen remodel runs $50k. One needs to factor this into the purchase price of a home and ensure the extra cash is around to make it happen if a remodel is in your plans.

  4. This is great Tia! My husband and I were looking at houses just the other day. Thanks you so much for the helpful information!

  5. My wife and I are planning on purchasing a home next year and already saving for the repairs and filling up the home. Watching HG TV already has us prepared and it’s great to see they aren’t over exaggerating.

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