Most people understand that when they buy a home, they’ll need a down payment, but there are many other costs involved that they tend to forget about. Here are some of the costs that you’ll incur.
After you go under contract, you’ll move on to the due diligence period. During this time, you’ll have to pay $400 to $500 for a home inspection, as well as fees for a termite inspection, a $100 radon test, and an HVAC inspection, which will run about $150 per unit.
Your lender is also going to order an appraisal and have you pay around $400 to $500 for it, unless you’re paying in cash. It’s mandatory if you have a loan.
Additionally, a home may need a well, water, and septic inspection depending on its location. These can run around $400 a piece.
When you add all of this stuff up in the initial phase, you’re going to need around $1,300 or so in cash. You’ll also have to write some checks for the due diligence fee (anywhere from a few hundred to a few thousand dollars), an earnest money deposit of about 1%, which will sit in a trust account, and closing costs.
‘Closing costs’ is a lump term that bundles all of the little costs that you’ll have to pay at the closing table. These include things like your loan origination fee, attorney closing fee, credit report fee, recording fee, and prepaid escrow items for your taxes and insurance.
At the end of the day, you could easily incur $8,000 to $10,000 in cash in addition to what your down payment is. Keep this in mind when you’re getting ready for the process.
If you have any questions for me about buying a home or anything else related to real estate, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.