Many Homebuyers are surprised when their lender hands them the “Loan Estimate” which some may remember as an “estimated HUD” sheet. This is the form used to give an estimation of funds required at the closing table. Education helps avoid surprises when you’re ready to buy a home.

 

Let me start with a word of caution. Each State, County and Locality have unique costs associated with buying. Also the type of property, be it single family, condo, farm etc could all have distinctive charges. Make sure to question your agent and lender about these possibilities. With that said let’s walk through what I consider standard costs when buying your home.

 

EARNEST MONEY – This is the amount you will submit with your offer. Depending on market conditions this could typically be 1%-3% of the sales price. If your offer is accepted this money is held by the escrow company and applied to your closing costs.

 

HOME INSPECTION – The average cost is $300-$500. Inspections can uncover structural, mechanical or other potential issues. Pest and Radon gas can be additional fees.

 

APPRAISAL – Most lenders require an appraised valuation of the property. You will pay on average $300-$500 for this service.

 

DOWN PAYMENT – I would need two more articles to cover the mortgage options that exist today. Some programs offer multiple loans that help keep down payment very low. Others fall into standard loans such as FHA or Conventional and require 3%-5% minimum amounts.

 

MORTGAGE INSURANCE – Some loans require a form of Insurance that protects the lender in the case of default. This fee is typically added to your monthly mortgage payment. If your down payment is 20% or larger insurance is normally not required.

 

PROPERTY (HOME-OWNERS) INSURANCE – You will be required to provide a policy at closing for the home. Typically this is prepaid for the first year and costs run between $800-$2000.

 

TAXES – You are required to pay property taxes and most lenders setup what is called an escrow account. This will pay the proper Tax and Insurance to each provider. Depending on the date you close, amount required for this account can vary. Property taxes could be a little as a few hundred dollars to over many thousands per year. Consult your agent or lender for these amounts.

 

OTHER CLOSING FEES – Some other fees that may show up on your closing paperwork could be; Recording charges, Credit report fees and Lender’s origination fee.

 

YOUR NOT DONE – Don’t forget about paying the moving company. You should also budget 1% yearly for upkeep to the property.

 

Hopefully this has given you a better understanding of the costs involved in a real estate transaction. Understanding and controlling these fees will allow you to budget properly when you’re ready.

 

ReallyONE.com was founded to simplify the process of buying and selling real estate.  We have done this by merging traditional real estate best practices with the money-saving efficiency of current technology.  Contact ReallyONE about how you can save money on your next purchase or sale.