What are all the costs of buying a home? - consumerfinance.gov

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What Are the Costs of Buying a Home?
There’s more to the costs of buying a home than the price on the for-sale listing.
There are three basic kinds of costs involved when buying a home:
The cost of the home itself, the cost of the mortgage loan, and the real estate costs such as property transfer taxes and other government fees..
It's important to consider all of these costs as you make your decision to buy a home.
Buying a home is exciting. It’s also one of the most important financial decisions you’ll make. Choosing a mortgage to pay for your new home is just as important as finding the right home. Our Owning a Home tools and resources can help guide you through the process.
Transcript:
There are a lot of costs associated with purchasing a home. When making the decision to buy a home, it’s important to know and consider all the different costs that you will pay.
There are three basic kinds of costs involved when buying a home: The cost of the home itself, the cost of the mortgage loan, and the real estate costs.
The cost of the home itself is the price you agree to pay the seller.
Then there’s the cost of the mortgage, which is the price you pay to borrow money to buy the home. Lastly, you have real estate costs that include the costs of transferring the property to you, as well as ongoing taxes and maintenance costs.
You pay part of these costs upfront, when you close on your home, and part over time.
Upfront, you’ll pay part of the cost of the home itself with your down payment. You’ll also pay “closing costs”, which include both mortgage costs and real estate costs. Upfront mortgage costs include fees you pay to your lender, like an origination fee; fees for services like appraisal fees and title insurance; and sometimes, upfront mortgage insurance fees. Upfront real estate costs include property transfer taxes and other government fees.
You pay the rest of the costs over time.
The amount you borrowed is known as the principal. Part of the mortgage payment you make each month will go toward paying off that principal.
Another part of your monthly payment goes to pay interest on the loan. If you made a small down payment, less than 20% of the home’s price, you will also typically pay mortgage insurance.
You’ll also have to pay ongoing real estate costs, like property taxes, homeowner’s insurance, and homeowner’s association dues. These costs can increase over time. For many people, taxes and insurance costs are bundled into your monthly payment, which means your monthly payment can increase even if you have a fixed rate loan.
Because there are so many costs associated with buying a home, it’s important to talk to your real estate agent and lender and ask them how much you can expect to pay, and when.