Buyer Costs to Consider
Front-end Expenses (before you own the home):
Earnest $ - To be respected as a strong buyer to the seller, we often recommend including 1% of the purchase price as earnest money as part of the offer. For example, if you offer $300,000 on a home, be prepared to pay $3,000 earnest $ within 3-5 days of your offer being accepted. At closing, this money can be applied toward your down payment and closing costs and is refundable if the contract is terminated based on inspection, appraisal or other contingency defined in the purchase agreement. However, each transaction is unique, and sometimes, we advise our buyers to offer less or more than 1% earnest money based on a given scenario. So please don’t let that 1% threshold scare you! Let’s chat – your situation may suggest a different level of earnest money!
Inspection Costs – general home inspection and termite inspection are fairly standard and cost around $400-$500 total. Other inspections that buyers sometimes choose to do will merit additional charges. Additional inspections can be done to test for radon, mold, structural engineer, chimney, pool, survey, septic tank, follow-up on general inspector findings (electric, HVAC, roof…)
Appraisal Costs – usually around $500. These can sometimes be paid at closing. Your lender can advise.
Closing Expenses (paid on day of closing – date of ownership)
Down Payment – Determine this with your Mortgage Broker/Lender on the front end. Common options include - FHA = 3.5% down. Conventional = 3%+ down. THDA = programs to help with down payment, interest rates are usually higher and there are conditions for staying in the house a certain length of time. VA=zero down options. Lenders may also have additional options that fit your specific needs better like a jumbo loan or a doctor’s loan. There are also revitalization & income specific zero-down programs available from time to time that may fit your loan needs.
Closing Costs – are in addition to the purchase price and typically total 1-3% of the purchase price. These include lender fees, prorated taxes, home owner’s insurance, title & closing attorney fees. (Sometimes buyers ask the seller to pay for some or all of these costs. However, in competitive markets, sellers can find buyers who don’t need or want them to pay for these expenses.)
Other Miscellaneous Costs – moving expenses, utility turn on/cut off fees, HOA transfer fees, etc. These are costs we can help you plan for on a case by case basis.
Other Info to be Mindful of:
Condos usually have HOA (Homeowner Association) fees and houses sometimes do. As a buyer, you will want to do some research to confirm the HOA is in good shape and that any community regulations and covenants meet your needs.
Factor in property taxes & insurance costs when considering your mortgage costs. (Your lender will help you with this.)
Condos mortgage rates are often a little higher than house mortgage rates.
Pay attention to “points” on mortgage & closing quotes.
Check anything that is important to you – school zones, crime rates, inspections, etc.
When buying a home – do not do anything during the process that would negatively change your FICO score or financial status. For example: Do not open a new credit card account, do not make large purchases or buy anything on “12-month same as cash,” do not buy or lease a car. Speak with your mortgage lender at the beginning of the process about this – and follow their advice!