17 home buying expenses
Updated: May 27, 2021
There are so many charming houses in the Route One Corridor communities but writing the winning offer for a house as adorable as this one in College Park means beating out all the rest of the competition. Make sure that you are confident putting in an offer by knowing all the costs you should anticipate up front!
Are you sure that you are prepared for the costs of buying a home? You should consider Up-Front costs such as the down payment, cost of the home inspection and closing cost. Don't forget to also consider ongoing costs such as taxes and home insurance as well as upkeep costs like decorating, renovating and lawn-care.
Up-Front Costs: Prepare to Pay These Before You Move In
1. Down payment. A down payment is the amount you contribute toward a home’s purchase price. Although it’s not required for all mortgages, depending on the lender or loan type, it can range from 0% to 20% of a home’s sale price.
2. Home inspection. Even if your lender doesn’t require it, a home inspection is a smart investment. It can detect existing problems with the home and, depending on the results, might give you an opportunity to renegotiate the price, ask for repairs or even back out of the offer. Typically $500-$800.
3. The termite inspection is an additional cost above and beyond the home inspection. It typically costs about $75-$150 and can be performed at the same time as the home inspection.
4. Closing costs. Before you can finalize the sale, you’ll be responsible for several fees. Your lender should provide you with an estimate of how much you can expect to pay in closing costs, but they typically range between 2% and 5% of the loan.
5. Appraisal fee. Required by lenders, an appraiser provides you and your lender an independent, estimated value of the property. It will ensure you’re not paying more than what the house is worth. The average cost is $300 to $500.
6. Taxes. Depending on when you close and when property taxes are due, you could owe several months’ worth of property taxes at closing. They’re calculated based on your home’s value.
title search and legal fees which cost around $800
title insurance (this is optional) which costs around $1200-$1500
transfer and recordation taxes required by the state and county, your half is approximately 1.225% of the purchase price of the house
about a half year of property taxes
7. Homeowners insurance. Most people expect to pay homeowners insurance, but many don’t realize they may have to prepay an entire year at closing.
8. Private mortgage insurance. If your lender requires private mortgage insurance (PMI), you may have to pay the first premium at closing. (Usually if your down payment is less than 20%)
9. Settlement Attorney fees. Some states require you to have an attorney manage closing to make sure all the documentation is set up correctly, so you’re protected. The average cost is $800 to $1500.
10. Processing fees. These fees cover the lender’s costs to prepare the loan. They could include loan origination or credit report fees and the cost of the application.
11. Other costs. Additional costs could include survey fees (to determine the property boundaries), title insurance and recording charges (the cost for state and local governments to record your deed, mortgage and loan documents).
12. Moving costs. Whether you rent a truck to move yourself or hire a moving service, don’t forget to add those costs to your budget.
Ongoing Costs: Prepare for the Long-Term Costs of Homeownership
13. Mortgage payment. Once you’ve negotiated a purchase price and know your rate, your loan officer can tell you what your monthly loan payment will be. If you select a fixed-rate loan, your principal and interest payment won’t change over time; adjustable-rate loan payments may change as the loan’s rate adjusts.
14. Taxes. Your yearly taxes are based on the value of the property and your state's/locality's rates. Home sellers must give you the current property tax assessment, and the seller’s real estate agent can provide the amount of tax paid the previous year.
15. Insurance. In addition to homeowners insurance, you also may be required to carry flood or other hazard insurance, depending on the home’s location. And, if your down payment is less than 20% of the loan amount, you may have to pay private mortgage insurance (PMI). Navy Federal has mortgage options that don’t require it.
16. Homeowners association fees. If your home is in a development governed by a homeowners association (HOA), you’ll probably have to pay fees. Most listing services like Realtor.com and Zillow.com include the HOA fees in their property listings. It’s a good idea to find out if the fees are increased periodically and, if so, how often and by how much.
Upkeep Costs: Prepare to Keep Your Home Current and in Good Shape
17. Decorating and Home improvements. If you bought a fixer-upper (or even if you didn’t), you’ll probably have a list of home projects that you hope to do. Before diving in, price out their cost and, if you aren’t planning to do them yourself, get an estimate from more than one person. If your savings won’t cover your projects, once you’ve made payments for a while, you may be able to use your home’s equity to finance improvements.
18. Maintenance. Keeping the lawn trimmed, lights on and the house comfortable are ongoing expenses. Appliances, windows, the roof and other components will age and need to be repaired or replaced periodically. Some, like a furnace, won’t need to be replaced for 15 to 20 years, but ask the seller how old everything is. Having an emergency fund can help you cope with the cost of unexpected repairs.
Click here for your own copy of the House Hunting Worksheet.
I created this helpful resource to help you keep track of the essential details of each house that you visit. It has places to keep track of:
house facts (square footage, bedrooms, baths)
commute time, schools, restaurants
pros and cons
furniture fits guides (bed and tv)
Ready to buy?
Contact me today at email@example.com or 240-413-4141 to talk about your plans for today and your plans for the future. We can discuss your current home value and the value of homes in your immediate vicinity. That kind of information can really increase your confidence as you make your decisions.
Who am I and how can I help you?
I'm Tamara Beauchard - realtor, architect and right-fit specialist
As a top-performing realtor with Re/Max Professionals, I handled nearly $12 million in real estate transactions this past year. I stay on top of the market to ensure that you are confident about the price and the process from our first meeting to the settlement table.
You have an architect on your side! My experience in the design and construction industry means that we can talk about renovations and improvements that will both beautify your home and improve it's resale value.
I'm a right-fit specialist who provides consulting services for people who are not ready to buy or sell right now, but need advice on where to start with renovating or downsizing. More about that service here.