The Fees Associated With Buying Your Home

Sometimes the fees associated with buying a home surprise people.  Buying a home is already overwhelming, so surprises related to finances are never fun.  Here is a breakdown of the fees you can expect prior to closing on your new home.

  • Mortgage Application Fees
    • These vary by lender, and are due at closing. These include the cost of appraisal ($350-$500), credit report ($25), lock-in fee (varies) and other costs incurred during the process. These fees are not refundable, so make sure you’re ready before you start the process.  They also vary depending on your lender, so be sure to shop around to find the best deal for you.
  • Earnest Money
    • The is a “good faith” payment toward the property you are purchasing that is owed when you make your offer.  Your earnest money is held by an escrow company, and is applied to your down payment at closing.  This is ordinarily 2-4% of the total purchase price of the home.
  • Inspections
    • Home Inspection-$350-$500 due at time of inspection.
      • A home inspection is recommended for any purchase, even if you are paying cash for the property. Home Inspectors are licensed, bonded & trained to look for any deficiencies the home may have; inside and out. The home inspection also allows you to ask for repairs of the property and/or back out of the purchase of the home.
    • Well Inspection-$350-$500 due at time of inspection.
      • If the property gets water from a well, a well inspection is recommended.  A well inspection checks to make sure that the well is functioning, and tests the water for contaminants that are unsafe for drinking water.
    • Septic Inspection-Usually paid by the Seller
      • In the property has a septic system, this inspection checks the make sure that the system is fully functioning.
  • Down Payment
    • The down payment, required on most loans, is an initial payment of 3-20% of the total purchase price of the home.
  • Loan Origination Fee
    • Charged by the mortgage company to cover their costs, this fee is typically .5-2% of the total loan amount.
  • Title Services and Title Insurance
    • These fees vary depending on total loan amount and the type of policy.
  • Government Recording Fees & Taxes
    • Vary on location and total purchase price of property.
  • Deposit for Escrow
    • This initial deposit is for property taxes, home owners insurance, flood insurance, and other fees covered by escrow.
  • Initial Interest
    • Also known as “Daily Interest” this covers interest from your closing date to the end of that month.
  • Property Taxes, Home Owners Association Dues, Homeowners Insurance and other miscellaneous costs
    • These costs, usually pro-rated, are also paid at closing

Although this might seem like a lot, in our market our average buyer closing costs are below $5,000.  A small price to pay for the investment of a lifetime.

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