Total Cost of Buying a Home

Know What to Expect When Buying Property

Everyone dreams of being a homeowner someday, but there are practicalities involved that need to be considered before that dream can come true. Deciding if you’re financially stable enough to purchase a home involves looking at the upfront costs, like how much it sells for, and the down payments. But some expenses need to be budgeted for after closing on a deal too!

If you’ve been a renter for a long time, you may not know about the monthly bills involved with buying a home or the costs of a sale. Below is the rundown on upfront and recurring expenses you may face when buying property!

Upfront Costs

In a fantasy world, buying a house would be as easy as exchanging money for keys and living happily ever after. Unfortunately, that is not the reality– the home buying process can be long, drawn out, tedious, and involve lots of paperwork.

The upfront costs when buying a home mean money that you will pay out of pocket once your offer has been accepted. These costs may include:

Down Payment:

The down payment for a house is the money required upfront to secure a mortgage loan. This is due during the closing of a sale, and it is typically a percentage of the home’s overall price. Down payments can range from 3 to 20 percent of the purchase price, with the average being 7% for most first-time American buyers.

Inspection and Appraisal Fees:

During the home buying process, the buyer will be responsible for covering specific service fees that come with taking out a loan. The appraisal is necessary because it helps the mortgage lender determine the house’s value and decide how much of a loan to give. The inspection, or survey, of a home for sale, is essential because it provides the potential buyers a complete picture of what covers their property.

Both fees only cost a couple of hundred dollars, depending on the circumstances.

Taxes and Government Fees:

The buyer is usually charged taxes or government fees when the property title changes ownership. These numbers can depend on your state and can be negotiated between the buyer and seller as a split cost.

Recurring Costs

If you’ve done your homework and saved up money to cover the closing costs on the sale of a house, you next need to consider the recurring fees that you’ll be responsible for over time. As a homeowner, you’ll need to budget for:

Mortgage Payments:

For most homeowners, mortgage payments become their most significant ongoing expense. This is essentially how you pay back your loan to the bank for the house you buy. This number will include the principal, or the amount you borrow for the home, as well as interest.

You can avoid high mortgage payments by purchasing a home that isn’t very expensive, but good quality homes for low prices can be hard to find on the market.

Property Taxes:

Property taxes are only due about once or twice a year but can vary greatly depending on your state or county. These numbers can fluctuate if local governments decide to implement municipal projects, so you can’t expect these taxes to remain the same for the entire time you live somewhere. Research local tax information about an area before purchasing a home to save time and money!

Be a Prepared and Informed Homebuyer

The best way to make the home-buying experience stress-free is to keep yourself informed about the costs you may expect down the road. Don’t let the financial responsibilities of closing on a sale surprise you! Buying a home can be easy and fun if you educate yourself on the expected total costs.

Stay informed by checking out more real estate articles from realtor Linda Moore today!