Buying a house is a huge investment, so when you go into the homebuying process, it's important to know just how much you can expect to pay. If you aren't sure about the costs that are involved in a real estate transaction, we've put together a quick guide for you below. In addition to your new home's purchase price, you should expect the following costs of buying a home:
Earnest money. When a conctract is written, the buyer presents earnest money to show their serious intent to buy the home. There is no set amount for earnest money, and it sometimes depends on the purchase price of the home, but a typical amount tends to be somewhere around $1,000.
Down payment. The down payment depends on the type of loan you secure, but you always have the option to make a larger down payment than is required.
Home inspection. This is a very important step in buying a house, as it may reveal issues that need to be resolved prior to closing. In fact, many contracts are contingent upon a satisfactory home inspection. A home inspection typically runs from $300 to $500. Make sure to get a few quotes before you decide on who to hire.
Appraisal. The cost of an appraisal may be wrapped up in the closing costs. Your lender will choose who to order the appraisal from, but you pay the fee, which should be around $300 or $400.
Closing costs. Expect to pay anywhere from 2% to 7% of the purchase price in closing costs. Every transaction is different, and closing costs are definitely no exception to that rule. You might have to pay 100% of your closing costs, or the seller might contribute as well. Charges included in the closing costs vary, but a few examples are:
- Credit report
- Loan origination fee
- Attorney's fees
- Discount points
- Appraisal fee
- Title insurance
- Title search
- Escrow deposit
- Recording fee
- Underwriting fee
- Taxes and insurance
If you have questions or apprehension about exactly what you need to be prepared to bring to the table, talk to your lender. They're always ready with a wealth of knowledge and reassurance.
Happy buying!
