26 Feb 10 Hidden Costs of Buying a Home in St. Louis That Could Surprise Buyers

When St. Louis buyers begin the process of purchasing a home, they often focus on the obvious costs, like the down payment and mortgage. However, the hidden costs of buying a home can quickly add up, making it essential for homebuyers to understand all the additional expenses involved. At Hermann London, we help St. Louis buyers navigate these hidden costs, so they can budget effectively and avoid any unexpected financial challenges during their home purchase. Below, we break down the key hidden costs of buying a home in St. Louis and offer tips on how to plan for them.

1. Hidden Costs of Buying a Home: Closing Costs

While not exactly a hidden cost, closing costs are often underestimated. These fees can range from 2% to 5% of the home’s purchase price. In St. Louis, closing costs can include:

• Loan origination fees: Charged by the lender to process the mortgage.
• Title search and title insurance: Protects you and the lender if there are any issues with the property’s title.
• Home appraisal fees: Required by the lender to ensure the property is worth the loan amount.
• Attorney fees: If you hire a real estate attorney, these fees will be part of the process.
• Recording fees: To officially record your purchase with local authorities.

Make sure to set aside a portion of your budget for these fees, as they can be significant depending on your loan type and home price.

2. Hidden Costs of Buying a Home: Home Inspections

A home inspection is a crucial step in the buying process, but it’s an additional cost that many first-time homebuyers may not account for. On average, home inspections in St. Louis cost between $300 and $500, but this can vary based on the size of the home and additional inspections (e.g., pest inspections, radon testing).

While this may seem like an upfront expense, it can save you thousands in unexpected repairs down the road. You may also need to pay for additional inspections if any red flags arise during the initial inspection.

3. Hidden Costs of Buying a Home: Homeowners Insurance

Homeowners insurance is essential for protecting your investment, but the cost can vary based on your home’s location, age, and the level of coverage you choose. In St. Louis, the average cost of homeowners insurance is around $1,500 per year, though it can be higher if your property is located in an area prone to flooding or severe weather.

Be sure to shop around for the best coverage and rates, and include this cost in your monthly budget. It’s also worth noting that your lender will likely require homeowners insurance as a condition of your mortgage.

4. Hidden Costs of Buying a Home: Property Taxes

Property taxes are a recurring cost that often surprises buyers, especially those moving to a new area. In St. Louis, property tax rates are relatively high compared to other cities in Missouri. The average property tax rate in St. Louis City is about 1.14%, and in St. Louis County, it’s around 1.06%.

Property taxes can vary significantly based on your home’s value and location. It’s essential to get an estimate of these costs before you buy, as they will add to your annual expenses.

5. Hidden Costs of Buying a Home: Homeowners Association (HOA) Fees

If you’re buying a home in a neighborhood with a homeowners association (HOA), you’ll likely face additional monthly or annual fees. These fees are used to cover the costs of maintaining common areas, amenities (such as a pool or gym), and enforcing community rules. In St. Louis, HOA fees can range from $100 to $500 per month or more, depending on the community.

These fees can often be negotiated or reduced by reviewing the HOA’s budget and services, but it’s crucial to factor them into your overall housing costs.

6. Hidden Costs of Buying a Home: Utility Bills

Once you move into your new home, you’ll need to account for utility bills. The cost of electricity, gas, water, and trash services can vary based on your home’s size, location, and usage. In St. Louis, the average monthly utility bill is around $200 to $300 for a single-family home, but this can increase significantly depending on the time of year and the efficiency of your home’s systems.

Don’t forget to budget for utilities when assessing your monthly homeownership costs, and take steps to improve your home’s energy efficiency if possible. Insulating your home, upgrading to energy-efficient appliances, and maintaining HVAC systems can help reduce these ongoing expenses.

7. Hidden Costs of Buying a Home: Maintenance and Repairs

Even if your new home is in excellent condition, there will always be ongoing maintenance costs. St. Louis homeowners should budget for routine maintenance tasks such as lawn care, gutter cleaning, and servicing HVAC systems.

You should also set aside funds for unexpected repairs. The general rule of thumb is to save 1% to 2% of your home’s purchase price annually for maintenance and repairs. For example, if you buy a home for $250,000, you should aim to save $2,500 to $5,000 each year for home maintenance.

8. Hidden Costs of Buying a Home: Private Mortgage Insurance (PMI)

If you’re unable to make a down payment of at least 20% on your home, you’ll likely be required to pay private mortgage insurance (PMI). PMI protects the lender in case you default on the loan and typically costs between 0.3% to 1.5% of the loan amount annually.

While PMI is not a permanent expense and will eventually go away once you’ve built up enough equity, it’s an additional cost to account for in the early years of your mortgage.

9. Hidden Costs of Buying a Home: Moving Costs

While you may be focused on the costs associated with purchasing your home, don’t forget about the expense of moving. Whether you’re hiring movers, renting a truck, or simply buying packing materials, moving can be expensive. In St. Louis, moving costs can range from $300 to $1,500 depending on the size of your home and the distance you’re moving.

Be sure to get quotes from multiple moving companies and include this expense in your budget as you plan your move.

10. Hidden Costs of Buying a Home: Renovations and Upgrades

Many new homeowners want to personalize their property by making renovations or upgrades. Whether it’s updating a kitchen, adding a deck, or finishing a basement, these projects can quickly add up in cost. In St. Louis, home renovation costs can vary greatly depending on the scope of the work.

Before making major renovations, get quotes from contractors and factor in these costs into your long-term budget. It’s essential to have a clear understanding of how much you can afford to spend on home improvements and whether they align with your long-term goals for the property.

Conclusion

While the excitement of buying a home is undeniable, it’s important for St. Louis buyers to be mindful of the hidden costs associated with homeownership. By understanding these additional expenses, you’ll be better prepared to budget effectively and avoid financial strain down the road. From closing costs to maintenance and repairs, taking the time to plan ahead will ensure that your home buying experience is smooth and successful.

At Hermann London, we are committed to helping you navigate the complexities of the home buying process. If you’re ready to start your home buying journey in St. Louis, our expert team is here to help. Contact us today to learn more about the St. Louis real estate market and how we can assist you in finding your dream home while staying within your budget!