Common Costs of Buying a Home

As you prepare for closing or even begin researching the home buying process, it's important to know what to expect from the real estate transaction. Below is a list of common costs and fees associated with buying a home in the Triangle.

How Much Can I Expect to Pay?

Services and Fees

Typical Cost

Included as Closing Costs?

Home Appraisal $300–$500 Yes, unless you pay at the time of service
Home Inspection $300–$500 No
Due Diligence $500-$2000 Yes, unless you decide not to close
Earnest Money 1%–3% of the sale price No; it's subtracted from your closing costs
Loan Origination Fee Depends on the lender Yes, unless you pay prior to closing
Loan Processing Fee Depends on the lender Yes, unless you pay prior to closing
Loan Discount Points 1% of mortgage amount Yes, if you choose to purchase points
Private Mortgage Insurance Depends on the loan No; it's typically included in monthly payments
Homeowners Association Dues Depends on the community Yes
Homeowner’s Insurance Depends on coverage Yes
Property Taxes Depends on property's location and size Yes
Title Insurance Depends on the lender Yes
Recording Fee Depends on the government agency Yes

What Are the Common Home Buying Costs and Fees?

Appraisal: An appraisal is a report of the home's value and is prepared by a licensed professional. Unlike a comparative market analysis (which determines how much home buyers are willing to pay for a property), an appraisal determines how much financing your mortgage lender is able to provide you for the home.

Inspection: After the seller accepts your offer, your Realtor will schedule a home inspection. Since it's conducted by a licensed professional, an inspection will tell you what, if any, repairs need to be made to the roof, plumbing system, electrical wiring, foundation, appliances, and other parts of the home.

Due Diligence: As a home buyer, you have a window of time to conduct your "due diligence" on the property before going forward with your purchase. This period typically takes between 14 and 30 days and begins as soon as you and the seller sign the contract. You and the seller can negotiate the costs of due diligence, which could be anywhere from $500-$2,000, and the fee will be credited to you at closing. (If you decide not to close on the home, you will not receive this money back.)

Earnest Money: When the seller accepts your offer, you will pay an earnest money deposit to show that you're serious about buying the home. Typically, earnest money is 1% to 3% of the home's sale price, but you should review your contract with your Realtor to understand how much you will pay.

Loan Origination FeeYour lender may or may not charge you a fee for creating your mortgage loan. Be sure to ask your lender if they charge a fee and, if so, if the cost is negotiable.

Loan Processing Fee: Your lender may charge you a fee for processing and finalizing your loan. Be sure to ask your lender what the fees cover and if you can waive the processing fee.

Loan Discount PointsYou may have the option to purchase points to lower your mortgage interest rate — and, as a result, your monthly mortgage payments. Each point can lower your rate by 0.25% to 0.5%.

Private Mortgage Insurance (PMI): If you pay less than 20% down on the home, you will need private mortgage insurance. If you have a FHA and VA loans, you may also have to pay an upfront fee for private mortgage insurance in order to have a lower down payment.

Homeowners Association (HOA) Dues: If the home you're buying is part of a homeowners association, you'll pay one month's dues up front. HOA dues typically cover maintenance fees and other services.

Homeowner’s Insurance: Homeowner's insurance protects you from property damage as well as liability. Typically, you pay your homeowner’s insurance premium for the year at closing.

Property Taxes: Property taxes are based on the assessed, or taxable, value of your home. You may end up paying a portion of the tax amount at closing.

Title Insurance: Title insurance protects you from losing your home should there be any title claims, defects, or other disputes. You will pay a one-time fee for this as part of your closing costs.

Recording Fee: The recording fee covers services to the city or county for registering your home purchase in public records.

Want to Know More About Buying a Home?

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