HomeLight recently ran a survey that found approximately 70% of home buyers have at least one regret of their decision. One out of five people reveals that a top regret they have is underestimating the cost of buying a house.

If you aren’t careful and do not conduct some research, not only will you be surprised, but you will hurt yourself financially besides a new mortgage.

Purchasing a new home is exciting! You should enjoy this moment. Just make sure you shed some light on the hidden costs of buying a house before you hunt.

And don’t worry, we will let you know what you should expect in terms of costs. Keep reading for the full scoop.

Costs Of Buying a House

At a high level, you can see it in terms of a major theatrical production. When filming a movie or presenting a play, there are many people involved, from the writer to the producer to the stage crew and more.

Home buying costs have “characters” like:

  • The seller
  • The mortgage lender
  • An appraiser
  • An inspector
  • Title insurance company

There can be more, but this is your basic “cast.” Insurance, maintenance, and taxes will be ongoing costs that you will have aside from this.

Here, we will discuss a further breakdown of each of these areas.

Mortgage Costs and Fees

A sizeable portion of the total cost of buying a house is the mortgage itself. Foremost, you must budget for this. And not just the cost of the mortgage but the expenses that come with it.

Associated expenses? That’s correct. It takes money to borrow money.

Along with the mortgage, there are administrative fees. This covers the work that the company performs behind the scenes to help secure your loan.

Down Payment

This should be the biggest mortgage cost for you. You will want to pay your down payment upfront.

Some loans may not require a down payment. Other loans will require 3% of the purchase price, at the very least. If you can put down 20% of the price tag, this will cut one of the upfront costs of buying a house, which is called PMI (private mortgage insurance).

If you are unsure how much to put down, try this deposit calculator.

Lending-Related Fees

This includes underwriting and application fees. Lenders require new home buyers to pay for their use of capital, expertise, and the paperwork that is involved.

Among fees, they may charge an origination fee, credit report fee, and application fee. Usually, the main mortgage lender fee is the “origination fee.” This fee is approximately 0.5% to 1% of the amount of the mortgage.

Surveys of Property and Appraisals

This goes along with the lender-related fees. It is possible that you already have the information that these services provide. For the lender, that won’t matter because they need independent verification.

Everyone involved in the transaction must understand the property’s value and the property’s boundaries. When considering all costs of buying a house, you want to plan on these services, which may run you about $300 to $500.

Closing the Deal

There is tons of legal paperwork involved when you buy a home. When you arrive to make it official with the seller, you can see this clear as day.

In the last list of home buying costs, you may have an escrow fee. This is a charge that is made to put toward your insurance or taxes. It will disburse to the recipient on the correct due date.

There may be a fee for the closing agent for their time, which is separate. They use the term “closing fee.” The closing agent gets all the documents needed for closing ready.

Closing costs can pile up quickly. Based on a few factors, like if you are a first-time buyer or based on your income, you could qualify for assistance with closing costs.

Title-Related Fees

This is another collection fee that can add up to roughly $2,000. It covers a few of the upfront costs of buying a house, such as:

  • Title search
  • Title settlement
  • Title insurance
  • Recording fee

The title search can cost around $75 to $100. This is necessary to discover if someone else has a financial claim to the property you are purchasing, like a lien or an easement. You want to find a clean search to verify that you can purchase the property.

A fee for the title settlement covers administrative costs. These are associated with the closing, including items like escrow, notary services, and surveys.

Many lenders require title insurance to be purchased to protect the amount they wish to lend you. It could be around $1,000 if the agency picks a flat rate, or the cost could be a percentage of the sale price.

You can buy an owner’s title insurance policy if you would like the protection for your financial investment. This is not required, however.

Many states require a recording fee, though. This reports that the property changed ownership. A recording fee can be about $125, typically.

The recording fee covers costs for filing deeds and additional documents for the county’s public records.

Ongoing Costs

Once you take care of the upfront costs of buying a house, then come other items beyond your mortgage. You handle the ongoing fees as soon as you are the new homeowner. This means local property taxes and homeowner’s insurance premiums. Also, you need professional for moving like movers Rogers AR

If you are a part of a homeowner’s association, you will pay dues as well. 

Consider All Costs of Buying a House

It’s much more than just the mortgage. There are many nuances in the costs of buying a house. You want to be prepared, so you do not become shortchanged after the transaction.

For more brilliant, practical advice about your finances and financial planning, we have the articles you need to read. Stick around and keep clicking for more great tips.