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What are the Upfront and Recurring Costs of Getting a Mortgage?

Doowon Yang Jul 18, 2019
Mortgage Costs 101

If only the price tag were the only thing you needed to consider when purchasing a home. In reality, there are several additional costs that should be considered when choosing your dream home. These costs can be divided into two brackets: upfront costs and maintenance costs.

Upfront costs and one-time fees

Real Estate Agent Commissions

Buyers typically don't think of real estate agent commissions when they consider up-front costs. On the surface, it looks like the seller has to pay these. However, the agent commissions are typically baked into the listing price of the home. The standard commission rate is 6% of the selling price, and the selling agent often bakes 3% of that cost into the listing price. If you are not working with a buyer's agent, it doesn't hurt to try to negotiate for a lower price.

Mortgage Closing Costs

These are costs associated with processing a mortgage: an appraisal fee, application fee, origination fee, broker fee, title search fee, title insurance premium, credit report fee, etc. The list could go on. The total dollar amount of fees varies with each lender but the average buyer pays $3,700. Make sure to talk to the lender about the total sum of these fees. That's right, be sure to ask us about our fees. We would be happy to give you a breakdown.

These are processing fees related to closing the real estate transaction. These include escrow fees, flood certification, home inspection fees, and attorney fees. The cost of these miscellaneous fees varies by county and state, but are minor when compared to mortgage costs.

Maintenance costs

Mortgage Payments

These are monthly payments on interest and principal for you mortgage. The payments varies with the loan product you signed up for. There are additional mortgage insurance premiums for FHA, VA and USDA loans. Ask your lender for the exact amount you will pay in the future.


Lenders also require you to sign up for homeowners insurance, which can range anywhere from $500 to $2,000 a year.

Property Taxes

You typically pay property taxes once or twice a year. The average effective tax rate in Texas is 2.18%, thus the owner of a $200,000 property pays $4,360 of property taxes per year. The rate depends on the county. Be sure to ask your real estate agent for the exact tax amount for your county.

HOA Fees

If you are buying a house with a homeowners association, you'll have a regular fee (often monthly) that pays for maintenance and improvements on the entire complex, such as paintings, landscaping, and common areas. HOA fees vary drastically and depends on what the HOA provides. Sometimes HOA includes utilities such as electricity and water. Make sure to investigate the costs and efficacy of your HOA before agreeing to buy a home.


It takes a lot of energy to heat or cool a house compared to apartments, thus utility fees usually come as a shock to first-time home buyers. When you are purchasing a home, ask your agent for an estimate of monthly utility costs to alleviate unnecessary surprise down the road.


For first-time buyers, your home is the largest and scariest purchase you will have made. Make sure to do your research so that you have a reasonable estimate of your upfront closing costs and yearly maintenance fees. If you have any questions, an UpEquity representative is here to help.