The Real Costs of Buying a Home

By Chip Free

Chip Free is a seasoned real estate advisor with Lake Realty, a locally established firm in Lake Norman that his father founded over 30 years ago.

You’ve saved up for a down payment, gotten pre-approved, and are looking for your dream home. Great! Now, you’re ready to buy your dream home. Don’t forget to include the other costs associated with buying a home.

Here are some key expenses you should be aware of if you’re considering buying a home today:

1. Closing costs. In our market in 2025, closing costs are around 2.0% to 2.5% of the purchase price. This covers lender fees, appraisals, title insurance, attorney charges, recording fees etc. For a $400,000 home, that could be between $8,000 and $10,000. The biggest piece is usually the lender’s origination fee—but if you’re paying cash, you can avoid that altogether.

2. Prepaids and escrow accounts. Lenders typically require you to prepay several months’ worth of homeowners’ insurance and property taxes before closing. This isn’t optional and often these aren’t estimated accurately on the loan estimate for two reasons. One, the lender won’t know the taxes until you have identified an address. Two, the lender tends to estimate the insurance low so that they are not at a disadvantage when you are comparing lenders. For example, if one lender estimates the insurance accurately while another discounts it, then the monthly payment on the discounted quote will look better.

At closing, you will also pay for prepaid interest and this will depend on what day of the month you close. For example, if interest is $60 a day and you close at the end of the month then you only pay $60. However, if you close on the first of the month you could have 29 days of prepaid interest equaling $1,740. (This evens out because you skip a month before your first payment is due)

3. Inspections.. Home inspections are essential but come with costs. A home inspection costs will depend on size and age of the house. Here are a few examples:

1,400 sq.ft. condo = $400
3,200 sq.ft home (2 years old) = $500
4,100 sq.ft home (built in 1977) = $600.

I also recommend a termite inspection ($125) and a radon inspection ($150). If the home is on ‘well and septic’ then I recommend a water test ($250) and septic inspection. Other common expenses are a pool inspection, dock inspection and a survey.

4. HOA fees. You will pay your prorated portion of the HOA fees and many HOA have a capital contribution fee that averages around $250 in our market.

Need more guidance? Let’s connect. Feel free to call, text, or email me. I’ll be happy to help.