Home Cost: A Look at What Goes into Buying Your Dream Home

List Pricing for a Home

The list price of your dream home doesn’t always tell the full story about the total cost.

When you’re buying a home for the first time, you’ll likely run across many surprises. One that always catches first-time homebuyers off guard is sticker shock and the real cost of buying a home.

Home cost is a long-standing buyers myth. The idea that the list price is the price you pay sounds right, but there are a number of additional factors determining how much you will pay when all is said and done.  


The list price may have little bearing on what you ultimately pay. In a competitive neighborhood with a lot of interested buyers you may be forced into a bidding war where the list price is intentionally set low and buyers compete.

Similarly, if you’ve found a home that has been on the market for months and isn’t attracting a lot of attention, you can easily negotiate the price down. The main thing to remember is that sticker price isn’t always set in stone, so don’t be afraid to negotiate within reason and also don’t be surprised if a lot of interest sparks a bidding war.

Closing Costs

Closing costs are another unexpected expenditure for many first-time homebuyers. Closing costs include a number of different fees and costs that can vary depending on where you live, who’s issuing your mortgage and the structure of your contract.

Closing costs are generally a big negotiating point for homebuyers. For military buyers, the VA home loan program actually caps what veterans can pay in closing costs. In the vast majority of cases, VA borrowers wind up paying little to nothing when it comes to closing costs.

Property Tax and Tax Deductions

Don’t forget about property tax and tax deductions.


Although a lot of the real estate taxes involved with actually purchasing the home are rolled into closing costs, you should definitely think about taxes when you’re about to purchase a home in the grand scheme of how much it will actually cost you.

Homes generally account for the largest portion of your property taxes between the house itself and the land it is built on. Although this will cost a lot every year, the good news is that property taxes on a home along with mortgage interest are tax deductible.

Monthly Payments

Be realistic about your monthly payments. With homeowners insurance and bank fees, you’ll have to think of your monthly payments as more than just a piece of your mortgage. A simple way to remember this is PITI — principal, interest, taxes and insurance.

Extraneous Expenses

Also consider some of the extraneous expenses that come with owning your own home. If you’ve always rented you will now be responsible for maintenance. Whether this means you need to purchase a lawn mower or load up your tool bag, all of those unexpected needs you called a landlord for are now your job.

Although there’s a lot of responsibility that comes with owning a home, many people find the investment well worth the added work.

Photos courtesy of Kevin Shorter and John-Morgan