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Home buying packs a punch: Understanding initial costs

Get an overview of the upfront costs involved in buying a home so you can shop without any budget surprises.

A couple standing in a doorway celebrating with one another, while the wife holds up keys.

Buying a new home is very exciting. It’s also a huge investment. Understanding the upfront costs can help you feel prepared as you take the leap.

The price on the real estate flyer you’ve got taped to the fridge doesn’t reveal everything you’ll need to consider when sealing the deal. Here are some of the biggest variables to keep in mind and calculate into your home buying budget.

Closing costs: Closing costs include the fees for the services and expenses required to finalize a mortgage. Average closing costs for the buyer run between about 2% and 5% of the loan amount. That means, on a $300,000 home purchase, you could pay from $6,000 to $15,000 in closing costs.

Home inspection: Before purchasing, you’ll need to make sure your next home is structurally sound and in good enough shape to live in. If the inspection turns up troubling results, you may be able to negotiate a lower sale price or repairs before move-in. Home inspection fees, on average, range from $300 to $500.

Moving costs: General rule of thumb is, the more stuff you move and the further you go, the more expensive the move will be. So, start planning items to donate or sell (moving can be a great time to get rid of accumulated clutter). In addition to a deposit, there’s also usually a fee for moving extra-heavy items, booking during peak moving times, and storage if you can’t immediately move your possessions into your new home.

Maintenance: Even move-in-ready homes need work. Your best bet is to pay close attention during the home inspection and then budget for a repair fund. Some issues you might be able to roll up your sleeves and resolve yourself. Some might need to be taken care of by professionals right away for safety while others get slated for later as budget becomes available.

HOA: If your condo or homeowners’ association requires an annual fee, you might have to pay it upfront in one lump sum.

Furniture and homey touches: Seems obvious, but every towel rack, curtain rod and can of paint costs money and together they add up. Keep in mind what you’ll need right away.