The price of entry to homeownership involves more than just the down payment. About 44% of homeowners say they were unaware of the other costs associated with buying a home, like home inspection, document fees, property taxes, home insurance, and title fees, according to a realtor.com® survey of nearly 3,000 adults. About 11% of respondents also failed to factor in moving expenses.
“Unlike most big-ticket consumer purchases, for which most people pay the price plus any sales tax, a home purchased comes with a number of additional costs,” said George Ratiu, manager of economic research at realtor.com®. “Many first-time home buyers, particularly younger ones, don’t realize how much closing costs add to a price of a home. It’s significant.”
Homeowners paid an average of $6,087 for closing costs on single-family homes in 2020, according to ClosingCorp, a real estate data and technology firm. That average factors in appraisals, settlement, record fees, land surveys, title policies, and transfer taxes. It does not include home inspections, property taxes, home insurance, or moving costs.
Closing costs typically range between 2% and 5% of the loan amount, financial experts say. Buyers may be able to roll some of their closing costs into the mortgage if their lender allows.
“For people looking to purchase their first home, it’s important to research the costs involved in signing a contract to buy a home,” Ratiu said. “The purchase of a home, for most Americans, is their single largest financial commitment.”