Besides the purchase price of a home, there are other significant expenses that buyers should be prepared for. From closing costs to expenditures associated with home ownership, here is a breakdown of some of the most common costs to buy and own a home.
Closing costs typically range from 2-5% of the purchase price and are due at the closing of a real estate transaction. To put it in perspective, the closing costs on a $200,000 home could cost from $4,000 to $10,000. These one-time fees may include:
- Appraisal Fee: Estimated value of a home by a professional.
- Survey Fee: To verify property lines.
- Wire Transfer Fee: To transfer funds electronically.
- Loan Fees: Charges associated with your loan such as an origination fee for processing a new application for a loan, credit report fee…etc.
- Title Fees: Charges for title insurance and settlement fees.
- Recording Fees: Fees for the government to enter new records such as for the deed and mortgage.
Besides the monthly mortgage payment, there are other expenses that many first-time home buyers may overlook such as:
- Property Taxes: Your realtor should be able to provide you with the tax bill information before you purchase a home.
- Home Owners Association Fees
- Garbage & Recycling Fees
- Home Owners Insurance
- Private Mortgage Insurance: PMI usually costs up to 2% of your loan amount annually, if you put less than a 20% down payment.
- Utilities: If you’re moving from an apartment to a single-family home, you should be prepared for a bigger utility bill. In addition, you will likely have to pay for water and sewer if the property has municipal utilities. You can usually find out the average utility costs by calling the provider, but it is important to remember that the average may be significantly lower if the home has been vacant for a while.
- Maintenance: As a homeowner, you will encounter additional expenses to maintain their home, such as repairing or replacing appliances or home systems. Having a home warranty can help you avoid major out of the pocket expenses and give you peace of mind.