By Virginia Wright posted April 23, 2023
Buying a new home can be an exciting experience, but it's important to understand the costs involved to avoid surprises. While the cost of a home will vary depending on a variety of factors, such as the location, size, and condition of the property, there are some common expenses that every homebuyer should expect. In this blog, we'll explore what it costs to buy a home.
Down Payment:
One of the most significant expenses when purchasing a home is the down payment. This is the upfront payment made to the seller when purchasing the property. The amount required for the down payment varies, but it's typically between 3.5% to 20% of the total purchase price. For example, if the home costs $300,000, a down payment of $10,500 to $60,000 will be required.
Mortgage Insurance:
If the down payment is less than 20% of the total purchase price, the lender may require the homebuyer to purchase mortgage insurance. This type of insurance protects the lender if the borrower defaults on the loan. The cost of mortgage insurance varies depending on the loan amount and other factors but is typically around 0.5% to 1% of the loan amount per year.
Home Appraisal and Inspection:
Before buying a home, it's important to have it appraised and inspected. A home appraisal assesses the property's value, while a home inspection evaluates the home's condition and identifies any issues that may need to be addressed. The cost of a home appraisal can range from $300 to $500, while a home inspection can cost anywhere from $300 to $800 or more.
Closing Costs:
Closing costs are fees paid at the time of closing, which is when the homebuyer officially takes ownership of the property. These fees can include attorney, title, and other expenses. The cost of closing costs can vary, but it's typically between 2% to 5% of the total purchase price.
Moving Costs:
Moving costs can add up quickly and should be factored into the overall home cost. The cost of moving will depend on factors such as the distance of the move, the amount of belongings being moved, and the moving company chosen. Moving expenses can range from a few hundred dollars to several thousand dollars.
Utility transfer:
After closing, you will set up cost deposits, usually based on credit scores and the monthly invoice from the history of payments.
Property Taxes:
Property taxes are based on the property's assessed value and are paid annually. The amount of property tax varies depending on the home's location and the property's value. Property taxes can range from a few hundred to several thousand dollars annually.
Homeowners Insurance:
Homeowners insurance is designed to protect the home and its contents in case of damage or loss. Homeowners insurance costs vary depending on the home's location, the property's value, and other factors. The average cost of homeowners insurance in the United States is around $1,200 per year.
In conclusion, buying a home involves various costs beyond the purchase price. Budgeting for these expenses is important to avoid surprises and ensure a smooth home-buying experience. The costs discussed in this blog, including the down payment, mortgage insurance, home appraisal and inspection, closing costs, moving costs, property taxes, and homeowners insurance, should all be factored into the overall cost of buying a new home.
Disclosure. This is for information purposes to get you started. Cost will vary per transaction and from state to state. I am not an attorney, and this is not legal advice.