Buying a home is one of the biggest purchases someone will make in their lifetime. But not all of the expenses go into your mortgage. There are several out of pocket expenses a buyer encounters along the way. It is best to be prepared for what you’ll encounter so you aren’t caught with empty pockets!
Earnest Money – Your earnest money is like a deposit on your home that proves you’re serious about buying. This will be paid as soon as you have an accepted contract. It will be deposited into an account held by the seller’s broker until closing or until both parties agree to release it. At closing your earnest money will be applied to your down payment. The amount will depend upon what you negotiated in the purchase agreement contract.
Home Inspection – It is always strongly recommend that you have a home inspection. The inspector will look for major defects in the home so you can negotiate repairs and be aware of any underlying issues. The cost of the inspection varies depending on the size of the home, the age of the home, and the inspector. It normally ranges from around $300 to $500. This will be paid at the time of the inspection.
Any Additional Inspections – It may be wise to do an additional inspection on the home. Anything from structural inspections to termite inspections can be done. This will be a closer look at a certain area that is more specific than the general inspection. Depending on what kind of inspection you choose to have done this could be up to a couple hundred dollars,
Appraisal Fee – The appraisal is ordered by your lender to determine the value of your home. This will make sure your purchase price is close to the value of your home. The fee is typically between $350 and $450 depending on the cost of your home.
Home Owner’s Insurance – Your insurance cost will depend on the age, condition, and location of the home. Insurance can be paid in many ways. Sometimes it is paid at or before closing. Commonly it is escrowed by your lender to be paid as part of your monthly payment. However, it is good to be prepared to pay it until you know for sure what your lender does.
Home Warranty – The home warranty will cover any major appliances in your house and is highly recommended. The cost of a home warranty is $450 and is usually paid for by the seller, but is a negotiable in your purchase agreement.
Closing Costs – Buyer closing costs include the lender fee, title company fee, title search fee, and transaction recording free. Your lender will provide you an estimate of closing costs in your Good Faith Estimate. These will be paid for at closing. Closing costs are usually in the thousands of dollars. These are one of the most commonly negotiated items in the purchase agreement.