For most of us, buying a house involves taking on the biggest financial commitment we’ve ever made! Why do people take on this vast responsibility? The reasons vary.
Some folks want to put down roots in a community they love. Others need more space than their current apartment or rental can provide. Still, others see homeownership as an investment that will grow over time and earn them equity.
Whatever your reason, understanding the cost to buy a house is making sure you know exactly what you’re getting yourself into before you sign on the dotted line. Keep reading for some of the biggest expenses you’ll encounter when purchasing a home.
The down payment is the amount of money you put upfront to purchase your new home. Most lenders require anywhere from 3% to 20% of the purchase price.
The average American homebuyer takes out a mortgage in the amount of $374,900. For that price, you can expect to put anywhere between $10,000 and $15,000 down on your new house. But the more you put down, the better.
The closing costs are fees associated with buying a house. These include:
- Title search
- Title insurance
- Cost of any inspections
- Administrative items (such as recording documents)
These home buying fees are typically paid at closing or within 30 days after closing. The average house closing costs will run you between 3% and 6% of the total home price.
Sometimes your mortgage company will make you get supplemental insurance policies to cover damages like a flood. A typical premium is $67 per month.
The cost depends entirely on what type of policy you buy and how much coverage is included in that plan. Don’t just pick any old policy out there; shop around until you find something that feels right.
Property taxes are typically a fixed amount you pay annually. They vary by city and state, but the tax rate is about 0.5% and 2.5% of your home price.
You usually pay property taxes upfront at closing. The problem with this is: You may have budgeted for your monthly mortgage payments, but you haven’t planned for the costs associated with property taxes.
In that case, head to a lender and learn more about your financing options. You may be able to get your home financing approved in as little as 2 weeks.
Cover the Cost to Buy a House for Your Family
From down payments and insurance to taxes, buying a house is expensive. Weigh your options and take the leap when you feel like you’re financially ready to do so.
The cost to buy a house varies widely, so you’ll need to set a budget that’s appropriate for the homes for sale in your area. Learn more about your financing options and ways you can save for a future house by checking out some of our other blogs.
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