Purchasing A New Home?

The buying season is heating up. You’re eager to buy that new home. Do you know the costs associated with purchasing your new home? Well, here’s a simple list to make sure you’re not caught off guard with some unexpected costs.

1. Down Payment – This fee can vary from 3.5% of the purchase price for a FHA Loan and up to 20% for a conventional loan. Keep in mind that many loan programs exist and you can often contribute a smaller down payment, such as 5% or 10%, but you typically pay a higher origination fee or interest rate. Your lender will help you determine the best option for your situation.

2. Earnest money – Kind of a funny term, don’t you think? It comes from Old English meaning “zealous,” or “serious intent.” So, there you have it. It means you’re “zealously serious” about buying this home and you’re going to put some skin in it! For those of you who want a more contemporary definition, it’s a “deposit made to a seller showing the buyer’s good faith in a transaction and binds the contract.” The actual amount is usually between 1-2% of the purchase price.

3. Home Inspection – Fees vary greatly and are calculated differently by each home inspector. Variables used to calculate a figure are can be square footage, age of home, number of bedrooms, number of floors, finished basement and/or a combination of any/or all the above. For example, a 4,000 square foot home, the range is $425 – $625.

4. Appraiser – No getting out of this one! Unless you’re acting as your own banker and paying cash…you can opt out! But for the rest of us, a lender will require an appraisal. Again, fees vary, but expect to pay approximately $625. But in our HOT market, some appraisers are requiring higher fees, especially if a rush order is requested. Check with your lender on the fees.

5. Closing Costs – This one catches lots of folks off guard! It includes all the fees associated with the purchase: Lender loan origination fee, application fee, title insurance, credit reporting fees, private mortgage insurance proration, and various local taxes and recording fees. There is no way to provide a ballpark figure due to so many variables, so be sure to check with your agent or title company closing officer to get an accurate quote.

6. Moving Costs – Don’t forget your moving costs. This one is often underestimated. Are you moving yourself and renting a truck? Naturally, this is the least expensive option. But don’t forget the cost of materials; boxes, tape, stuffing, pads, etc. These items can add up fast! Then there is the cost of the truck, mileage, gas and insurance. Even a do-it-yourself local move can add up quickly. If you plan to hire a moving company, costs vary greatly. Be sure to get at least 3 quotes and check references. Oh, and DO read the contract fine print so you don’t incur
unexpected charges.

I trust this list will help in outlining the costs associated with your next home purchase!

Cheers!

Henning

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