Costs of Buying

So, you want to buy a house…the first expense that likely comes to mind is your down payment. And while that is a big chunk of change, there are other costs to account for when saving money for a new home search. My philosophy has always been for buyers to be as prepared as possible before diving in and a huge aspect of that is accurate + realistic expectations on the financing side of things…so here is what you can plan on:

+ 𝗘𝗮𝗿𝗻𝗲𝘀𝘁 𝗠𝗼𝗻𝗲𝘆. Typically 1-2% of the purchase price, and the minimum amount is set by the seller/listing agent. This is due within a few days of going under contract, and is a good faith deposit to show that you are serious about the purchase and have some skin in the game. This is not any additional cost, as it is applied towards your down payment + closing costs at closing.

+ 𝗜𝗻𝘀𝗽𝗲𝗰𝘁𝗶𝗼𝗻𝘀. Inspection fees are paid directly to the Inspector at the time of the service. The cost will depend on the square footage of the home, and any additional inspections you choose to add on (sewer, radon, structure, etc). Expect to be in the ballpark of $500-$600 on average.

+ 𝗗𝗼𝘄𝗻 𝗣𝗮𝘆𝗺𝗲𝗻𝘁. Minimum DP on a conventional loan is 3%…but many buyers choose to do more. Your down payment will affect your monthly payment, interest rate + mortgage insurance. In addition to those considerations, evaluate how important it is to have cash in hand vs invested in a home. Your lender should show you several options so you can make the best decision for your specific situation.

+ 𝗖𝗹𝗼𝘀𝗶𝗻𝗴 𝗖𝗼𝘀𝘁𝘀. The majority of this amount will be setting up an escrow account to pay for your annual taxes and homeowners insurance. You will also have various fees like an appraisal fee, a loan origination fee, a title closing fee, county deed recording, etc. Your lender should give you a very close estimation for this so there are no surprises, but generally they total about 1-2% of the purchase price.

My recommendation is to chat with a lender sooner than later so you can find out what your options are and save money + plan accordingly!