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How to Calculate the Cost of Buying a Home

You’ve made the decision—you’re going to upgrade to purchasing a home instead of renting. But now is budgeting time—have you considered the costs associated with buying a home, and are you ready to manage them?

Here are a few of the things you should keep in mind when you’re planning to buy a home for the first time.

Money down

One of the more predictable costs of financing a home is the money down—this can include your downpayment, as well as an earnest money (or funds that are a part of an offer to show your commitment to buying the property). The amount of this money down will largely depend on the rules and stipulations in the loan you’ve selected. It typically takes the form of a percentage of the purchase price, in the case of the downpayment.

Appraisal and inspection

In order to determine if there are any issues with the property, from HVAC problems to roof flaws, a home inspection is key. The cost of the home inspection can vary depending on the company you opt to use. While you may pay this cost upfront, many home sales lump the cost of an inspection into the amount you pay on closing day (which may or may not be split between seller and buyer).

The same goes for the appraisal, which is performed by a county or municipal official. The appraisal offers you an actual value for the property so that taxes can be assessed appropriately. Like the inspection, this cost is often made part of the total closing-cost amount.

Origination fees

Many mortgagors will charge a fee for “origination,” or filing and handling of your loan paperwork. Levo, for example, keeps these fees to a bare minimum to offer the maximum amount of savings to the borrower.

Closing costs

Additional costs that may or may not be included in your closing fees are a “survey fee,” which accurately identifies the property lines of your new lot; “credit reporting fees,” which some banks and credit unions may charge for checking your credit score; and title insurance, a critical protection to keep the buyer safe in the event that the seller doesn’t outright own the property in question.


Don’t forget the final cost of the equation—odds are you’ll be moving fairly soon after you close on your new home. So factor moving expenses into your budget. Whether you’re hiring a company to do the moving for you or you’re renting a truck for the afternoon to do it yourself, there are costs associated that should have a line item in your homebuying budget.

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