Every dollar matters when you are buying a home, and you need to know exactly what to expect. Prepare yourself for some of these hidden home-buying costs.
Also known as a “good faith” deposit, this is a small precursor to a down payment that signals to the seller that you are serious about buying the home. Without it, anyone could make an offer on any house they wanted and back out without any real consequences.
Earnest money is typically around 1-2 percent of your home’s purchase price and it’s sent at the time that you make an offer on the house. The money is held by the title company and you can expect your check to be cashed right away. If you end up buying the home, it will be contributed toward your down payment.
Once the offer is accepted, it’s time for a home inspection. This is one place where you definitely do not want to cut corners in an effort to save a few bucks.
A good home inspector will identify issues that could turn into major problems down the road. It’s much better to deal with them before you move in when you can lean on the seller to help pay for some of the repair costs.
A general home inspection by a certified inspector will cost a few hundred dollars, but you may need to add additional inspections for things like termites or asbestos depending on where you live and how old the home is that you’re buying.
Closing is the time when the remainder of your down payment is due, but there are other costs that can add up to 2-5 percent of the home’s total cost. Closing costs include:
- Attorney fees
- Lender fees
- Home appraisal
- Escrow deposit
The bottom line? Buying a home is going to cost more than you might expect, so don’t take your savings down to the wire with a down payment. The last thing you want to do is start your time in a new home in more debt than you can afford because of hidden costs.