What it Costs to Buy a Home

August 25, 2014

home for sale in ChicagoBefore you dive into homeownership, you should understand the true costs of buying a Chicago home. If you’ve saved up for your down payment and think you’re ready to go, take a few minutes to read this post.

Your down payment is just one of the many expenses involved in the home buying process. We’re not talking about maintenance or insurance and other down-the-road expenses; we’re talking about funds that you will actually need to have when you get to closing. Don’t get discouraged though, your lender and real estate agent can you help you prepare and budget for the full cost, so you’ll be completely ready when you come to the closing table.

The real estate experts at the Equifax Finance blog explain it all in a recent blog post, “

Buying a Home? Know What It Really Costs.”

First, closing costs can be estimated at around five percent of the cost of the home, though this number does vary in different parts of the country. When you are approved for a loan, your lender will give you a Good Faith Estimate that will outline what you can expect to pay for things like lender and administrative fees; costs for services like title insurers and inspectors; and taxes and fees required by the government.

Origination costs are what the lender and mortgage broker charge for making a loan. Around the nation one year ago, origination costs averaged a little over one percent of the cost of the home, not including title insurance, title search, taxes, property insurance, association fees, interest, and other prepaid items.

You’ll also pay transfer taxes and property taxes on Chicago real estate. The transfer tax is a one-time charge for transferring ownership from home owner to another. Property taxes are paid for as long as you own the property. Property taxes are paid in advance, so you may have to reimburse the sellers for any taxes that they have already paid. Property taxes depend on the assessed value of the home, local tax rates and when you close.

You may also have to pay for things like home inspections and special inspections for pests, radon or septic systems.

Read more in the full article on the Equifax Finance blog and while you’re there, browse through the many helpful real estate articles, as well as those on other personal finance topics like retirement, taxes, insurance, credit, identity theft protection and more.

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