Photo by Vecislavas Popa from Pexels
Buying a house is different than buying just about anything else. When you buy something from a retail store, the price is listed right there on the sticker. It's easy to know how much that item costs. The store sets the price and we as the consumers pay it.
When you buy a house, there are a lot of different costs and factors that affect how much you'll pay.
The Most Expensive Part of a Home
When you buy a house, the most expensive cost is – as you know – the cost of the property itself. This can vary widely based on the condition of the home, its location, the proximity to good schools, etc.
For example, a small, old home in the middle of a big city will cost as much (or potentially more) than a big, 5-bedroom home in the suburbs. Or you might find two neighborhoods that are right next to each that have the same floor plans, layouts, etc. but have different price points. The reason may be because one is in a good school district and the next one has bad schools.
Something else to keep in mind is that the price of a home isn't set in stone. The seller may be very eager to sell and accept an offer much lower than their asking price. Likewise, if a home was priced low and is sought-after, the demand for it might drive up the sale price to be even above the asking price.
Even though the property itself is the main cost you will incur, it's not the only one.
Closing Costs add to the Price of a Home
As you work through the mortgage paperwork with your lender, you will find yourself discussing the closing costs. These are essentially all the costs you need to pay to handle the administration pieces of buying a home.
For example, there's work that goes into getting the title of the home in your name. You'll need to pay for those title services at closing.
An attorney will put work into the closing of your home, so you'll need to pay them for that work.
Your lender up to this point has been doing work. They had the underwriter put the loan together based on your credentials such as your debt-to-income ratio and credit score. They worked with you to get the documents they needed to do the loan.
All of these closing costs add up to around 2% to 5% of the home's purchase price. So, if you buy a home for $300,000, expect anywhere from $6,000 to $15,000 in closing costs.
Monthly Payments to Buy a House
After you've closed on the house, congratulations! You are now a homeowner.
Well, kind of. You still need to keep paying the lender every single month for the mortgage. While some of that payment goes towards the principal of the loan, some is paying off interest. That interest is part of the cost of buying a home.
The same goes for things like property taxes and insurance. These come with the territory of buying and owning a home.
Wrapping it Up
How much does it cost to buy a house? Every house is different and is based on a lot of things such as the location, proximity to schools, your mortgage rate, and more. For more personalized advice, give us a call at (877) 306-0222 – we look forward to hearing from you!