Let’s talk about money! Money, money, money, money, moneeeyyyy!! One of the most recurring questions I get asked is… what does it cost to buy a home? This question is different for every buying situation but there are 5 key areas where a buyer will spend money throughout the real estate purchase.
1. Down Payment. Depending on your loan program, your down payment can range from 0% to 99%. Yes, you are reading this right – there are loan programs out there where you can put 0% down, depending on the qualifications. A trusted mortgage lender will help you find the loan program that is right for your financial situation.
2. Earnest Money. Earnest money is a good-faith measure that follows the sales contract and tells the seller, I ‘earnestly’ want to buy your home 🙂 I typically tell my buyers to estimate about 1% of the purchase price for their earnest deposit. This money will be deducted from the final amount needed to close the home.
3. Closing Costs. Closing costs can range from 1% to 4% of the purchase price and depend on whether you are purchasing the home with cash or a loan. There are costs involved with acquiring a loan and with the title company that is hired to transfer the property from seller to buyer. Again, every situation has a different number but this is a good estimate. Plus, if you have a stellar agent like me 🙂 we might be able to negotiate that the seller pays for a portion of these costs on your behalf.
4. Home Inspection. A home inspector will help determine if there are any serious problems with the home that need to be repaired before buying.
This can range from $300 to $1000 depending on any additional inspections that may need to be ordered.
5. Appraisal. When purchasing a home with a loan, the bank will order an appraisal to verify the value of the home. This is a cost that is typically paid by the buyer and will need to be paid once the appraisal is ordered. This can cost between $400 and $600.
That's it in a nut-shell! Remember, if you ever have any questions, never hesitate to call.