Buying a home isn’t all about the down payment. Many expenses are involved when you’re ready to buy a new home. Whether it’s your first time to buy a home, or a move to your dream home, here’s a list of the expenses for which you need to be prepared.
Earnest money. When you’re ready to make an offer, you’ll need to write a check, earnest money, for one to two percent of the total purchase price. This earnest money will be credited to you at the time of closing.
Inspection. You’ll need to hire a good, licensed home inspector to review the home you’re looking to buy. Home inspectors review your home from roof to crawl space or basement for structural integrity of the home, including any flooding issues, leaks, pests, damage to the home, plumbing, mechanical equipment efficiency and more.
Escrow. An escrow account is essentially a way for your mortgage company to ensure you have the money to cover taxes and mortgage insurance. Most commonly, escrow is for loans with less than a 20 percent down payment and is mandatory for FHA loans.
Appraisal. You’ll need to have the home appraised in order for your lender to approve the loan amount you’re seeking. The appraiser will review the home you’re looking to purchase and also pull comps of homes similar to yours to gain a fair market value appraisal.
Title company. You’ll need to pay a title company to ensure the home’s title is free and clear of any liens or problems. Your mortgage lender will recommend a title company or you may hire your own.
Credit check. To confirm your credit situation, you will pay for a credit check.
Origination fee. This is what you’ll pay the loan officer or broker for completing the loan. It is a small percentage of the total loan, and is typically one percent. It includes underwriting, originating and processing costs.
Down payment. The most obvious of the fees, but depending upon your loan type, you’ll have a down payment that will be wired at the time of closing to ink the deal.
Additional insurance. If the home is located in a hazard-prone area, you may be required to carry insurance, such as flood insurance.
So, as your Realtor, we will review all of these expenses and get your budget reviewed to be sure you’re ready for not only the down payment, but the fees that are part of buying a home. Contact me to get started in the search of your new home!