Buying a House: Hidden Costs and Trade-offs

Mortgage Rates Monday

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

Highs and lows: Buying a house is replete with them. You’ll have great days, like when you find the perfect house, and not-so-great days, like when you learn your mortgage rate has gone up just prior to closing.

Homebuying can be full of “gotchas,” the stuff that will try to sneak up on you and trip you up. Keep your eyes open for these potential surprises.

A place of your own might be a three-bed, two-bath house with a sprawling lawn or a cozy condo with a patch of patio. Either way, it’s home. Finding your next address will be a process involving trade-offs and compromises. The condo with the great view has a creaking, painfully slow elevator. The house with the perfect kitchen has a master bath from the ’80s.

Paint colors you can fix, but a load-bearing wall is likely staying right where it is. When , you want to put yourself into the day-to-day of living in that space. Parking here, sleeping there. Will you get tired of climbing these stairs? And what if kids are on the way?

Many neighborhoods, subdivisions and communities have covenants — strict regulations that prohibit certain improvements, activities and uses of a property. (These are sometimes called CC&Rs, for “covenants, conditions and restrictions.”) You own the place; certainly you can put up an 8-foot privacy fence, right? Or a basketball goal in the driveway? Perhaps not. It might be restricted by the covenants of the , or HOA.

Residential areas, condo associations and neighborhood associations can draft architectural and use standards as part of deed restrictions to protect the rights of many. These rules, along with applicable local zoning laws, can cover many things: pets, parking, appearance, personal conduct. Certain home-based businesses might be regulated or forbidden. Common areas might have a visitor limit. Parking in front of a property might not be allowed.

, you’ll want to know what restrictions are in place and whether the home you’re considering is compliant. You surely don’t want to buy into an existing problem.

In addition to closing costs as well as one-time and ongoing expenses such as homeowners insurance and property taxes, there are some other add-ons to consider.

Bear in mind some of these may also involve paying qualified pros to do the work: plumbers, carpenters, landscapers, electricians and handymen.

The seller of a home usually pays the commission, which is deducted from the sale proceeds. Often that commission is split between the listing and buyer’s agents, so even your agent is paid from the proceeds of the sale.

All of this can be negotiated — in or against your favor — depending on how competitive the housing market is where you are. You might also be able to have some or all of the closing costs paid by the seller, though that’s not very likely in a hot market.

Specific fees vary according to where you live. Some states require that an attorney generate and review the paperwork for a sale. Of course, that can mean some hefty fees, too. Some jurisdictions have transfer fees; most have recording fees that are charged by the local court to record the mortgage. New York state has a “mansion tax” that is levied on homes valued at $1 million or more — as well as a suggested gratuity for the title company’s representative. That’s right, a tip! It’s customarily $100-$200.

All fees will be estimated and provided to you prior to closing, but it can be a good idea to find out what’s common in your area by asking local real estate pros and lenders.

On a similar note...
Dive even deeper in Mortgages