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The True Cost of Buying a Home

You spend evenings browsing Zillow and weekends driving through neighborhoods with Redfin pulled up on your phone. You've made an appointment at the bank to get mortgage pre-approval. You know what you can afford – or do you?

The True Cost of Buying a Home

How much house can you actually afford? Here are nine costs to factor into your overall budget.

1

Closing costs

What they are:

Fees associated with the home sale, including processing fees to run credit reports, title searches, and underwriting.

How much they cost:

Usually 2% to 7% of your home's price, depending on the value of your home, your down payment, and location.

2

Appraisal fee

What it is:

An assessment of the estimated market value of your potential home, performed prior to receiving a loan.

How much it costs:

$300 to $500 is standard, but could be higher.

3

Home inspection

What it is:

An appraisal, analysis, and report of the house, including heating, plumbing, and structural components, by an independent and qualified inspector.

How much it costs:

$300 and above.

4

Property taxes

What they are:

Recurring taxes on the assessed value of your house that are used to fund local infrastructure, including government, schools, police, and other public departments and programs.

How much they cost:

Percentages vary by state, typically anywhere between .25% to nearly 2.5% of the assessed value of your house per year.

5

Earnest money account/Escrow

What it is:

A deposit made with an offer to a seller, put into escrow until closing.

How much it costs:

1% to 3% of the purchase price of the home.

6

Homeowner's association fees

What they are:

Recurring fees for the maintenance of common areas shared by a condo, townhome, or home in a planned development community.

How much they cost:

$100 to $1,500 and higher per month.

7

Homeowner's insurance and supplemental insurance

What they are:

Insurance that covers against damage, theft, or accidents that occur within the home.

How much they cost:

Varies, but the average annual cost is about $1,000.

8

Moving expenses

What they are:

The keys are finally in your hand! Now you might want to hire movers for all your belongings.

How much they cost:

$500 to $5,000 and above.

9

Maintenance and repairs

What they are:

Even homes in great condition will eventually need new appliances, roofing, and repairs and upgrades.

How much they cost:

Varies, but experts say it's smart to set aside $1 per square foot of your home annually for maintenance. The home's condition, age, and even the climate you live in can also affect maintenance costs.

Learn more about what to consider when buying a home:

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