What Are the Up-Front Costs of Buying a Home?The amount of cash you will need to purchase a home varies – depending on the price of the home and the type of loan you will be getting.Here are some
What Are The Up Front Costs Of Buying A Home
What Are the Up-Front Costs of Buying a Home?
The amount of cash you will need to purchase a home varies – depending on the price of the home and the type of loan you will be getting.
Here are some of the most common expenses:
1) Earnest Money Deposit – this usually runs from $500 to a few thousand dollars depending on the sales price of the home. It is a deposit you make to show your “good faith” in the transaction. The money is deposited in an account held by one of the Brokers or the Closing Attorney after your offer is accepted and everyone has signed the contract.
2) Home Inspection – generally run $300- $500. Legally you do not have to have an inspection done but it is in your best interest to have one done to protect yourself. Professional inspectors are able to identify potential issues that may not be visible to you.
3) Appraisal – costs approximately $300- $500. The mortgage company will order the appraisal. You will need to pay them before the appraisal is ordered. This is to make sure the mortgage company does not loan you more money than what the home is actually worth.
4) Down Payment – most lenders require at the very least, 3% of the purchase price as a down payment, although there are some programs that do not require any down payment.
5) Closing Costs – typically run around 3.5% of the purchase price. Closing costs can be negotiated as part of the contract. Sellers will often absorb some or most of a buyer’s closing costs.
If you buy a home priced at $200,000 here is a breakdown of what your costs might be:
Earnest Money $ 2,000.00
Home Inspection $ 400.00
Appraisal $ 400.00
Down Payment $10,000.00
Closing Costs $ 3,500.00
Make sure you have saved enough money before you begin your house hunting. You don’t want to find your dream home and not have the funds to pursue it. We can help you find an excellent, local lender who can help you get started with yourfinancing.
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