Home ownership is a big step, and on the surface it looks like the right financial decision every time – after all, rent is nearly always more expensive than a monthly mortgage payment. But, as you may have guessed, there is much more to it than that. Comparing monthly rent to monthly mortgage payments overlooks the hidden costs associated with buying and owning a home. We’ve broken these hidden costs down into two sections: the first is focused on the hidden costs associated with buying your home, and the second with the hidden costs of homeownership.
The term “closing costs” is somewhat of a catchall term for all the small (and large) fees associated with closing on a home. This can be appraisal fees, inspection fees, title fees, escrow fees… the list goes on. While it’s nearly impossible to foresee all the fees that may pop up, expect to pay between 2-5% of the purchase price of the home in closing costs.