10 Homebuying Costs To Know About
There are many things that go into the purchase of a new home. Most everyone knows that there is a necessary down payment to save up for other than the obvious purchase price that needs to fall into your budget. Here are 10 costs that you should be aware of when you buy your home.
Earnest money
When you put your best foot forward during the offer process your “earnest” money is the purchase commitment. Typically 1 or 2% of the purchase price is standard for most areas.
Escrow account
An escrow account is how your mortgage company makes sure you have necessary funds to cover related taxes and mortgage insurance. This is more common for loans with less than 20% down.
Loan origination fee
This fee is to cover the price you pay the loan officer for the loan including underwriting, originating and all of the processing costs. Plan on roughly 1% of the loan.
Home inspection
When the offer is accepted and you want to check the condition of the home, plan on a home inspection. These will unearth the true condition of the home. A safe bet is to plan on roughly $500 for this.
Attorney
Not all states require that you have an attorney for your closing, but you should definitely plan on having one to assist you throughout the process. Someone who can represent your best interest and be sure you are well covered.
Credit check
Lenders will typically pass along this cost to you in order to pull your credit report. Plan on roughly $30.
Additional insurance
Other than the standard homeowners insurance, you may be required to purchase additional insurance. For example those in flood zones may need to get a flood policy.
Appraisal
The only true way to certify a home’s value is through an appraisal. The lender will also pass along this cost to you so that they can be sure of the loan to value ratio and so forth. Plan on roughly $300-400.
Title company
You will pay a title company to research the title to ensure that it is free and clear of any issues. The lender will typically present you with this company.
Survey
This is not necessarily always the case, but a lender may require that a professional surveyor conduct a survey to determine the exact property lines. Plan on roughly at least $200 for this.