When buying a home, it’s important to remember that the list price isn’t the only cost you’ll incur during your purchase. There are a handful of fees that every homebuyer can expect to pay before they close the deal. Below is a breakdown of the five most common extra expenses that come buying a home.
Fees of Home Purchases – Down Payment
Outside of the overall price of the home, the down payment is probably the largest expense you’ll incur in the course of your purchase. Down payments for stateside buyers typically run from 3 to 20%, and from 25% and up for foreigners. There are of course exceptions to these standard rates, as well as aid programs for first-time or otherwise disadvantaged homebuyers, but a higher down payment is always a safe bet for securing the best terms for your loan.
Fees of Home Purchases – Earnest Money
Earnest money isn’t so much a fee as a show of good faith to the seller. Securing these funds (usually 1-5% of the purchase price) before you put in a contract on a home lets the seller know you earnestly intend to follow through on the purchase, and lets them take their house off the market without inviting unnecessary risk. The good news? Buyers get their earnest money back at the time of closing.
Fees of Home Purchases – Closing Costs
For homebuyers, collective closing costs are generally the second-biggest out-of-pocket expense involved with the purchase. Closing costs can include anything from loan origination fees, tax preparations, appraisals, title searches, and a handful of other fees depending on the unique circumstances of the purchase. These fees typically add up to between 1 and 5% of the sale price.
Fees of Home Purchases – Moving
Moving expenses can vary greatly depending on the number of possessions you’re transporting, the distance you’re traveling, and the range of moving services you opt for. Prices can run well into the thousands for cross-country moves, while first-time homebuyers with few possessions might only incur a fraction of that.
Fees of Home Purchases – Home Inspection
While technically optional, having your home inspected is always encouraged as a means of avoiding possible future complications with your purchase. Though inspection prices may run as high as several hundred dollars, investing in this important step can potentially save you much more money down the road. Some specific points of inspection include mold, septic, termite, foundational, structural, and HVAC inspections.
The extra fees involved in a home purchase can make the process feel that much more overwhelming, but don’t let them intimidate you. Our experienced Authentic Real Estate team has helped countless clients organize their budgets to best manage these expenses, and we can help you too.