Planning to buy a home? In addition to getting pre-qualified for your mortgage, keep these costs in mind when budgeting for your new place.
- Earnest Money Deposit – Usually 1% of your purchase price. This is cash you need to give when making an offer, but it’s not in addition to the price of the house. It goes towards your closing costs. This is also part of the offer writing strategy, so discuss with your real estate agent.
- Due Diligence Termination Fee – You would owe this fee to the seller if you were to terminate the contract during the due diligence period. It’s not an upfront cost and is only paid upon termination. This fee is completely negotiable between the buyer & seller and shows your seriousness in buying the house. We’ve seen these fees as low as $500 and as high as $10K. A good agent will explain the strategy behind this when writing an offer.
- Home & Pest Inspections – Even if you decide to buy the home “as-is”, we highly recommend having a home inspection so that you learn about the home’s systems and any potential issues that may need to be addressed right away or on down the road. Inspection costs vary based on the size of the home. For a first time home buyer (this is typically a smaller home), the cost is more around the lines of $400-$600. Keep in mind that in the State of SC, you can do any inspection you want to during the Due Diligence period, but it’s your responsibility to pay for it.
- Appraisal – Paid by the buyer and can be paid upfront to the lender or at settlement (which means it’s lumped into the money you bring to the table at closing). This fee is typically anywhere from $400-$600.
- Down Payment – This is what you are required to put down to buy a home and is determined by you & your lender. There are some cases where you don’t have to put anything down (Doctors Loans or VA loans) but your monthly mortgage payment will be higher. The minimum needed to buy a house is 3.5%. If you put down 20% or more, you don’t need to pay PMI (Private Mortgage Insurance) on your loan, which makes your monthly mortgage payment lower.
- Closing Costs – These include things like 6 months of homeowners insurance, state and local property taxes, attorney fees, recording and title fees, and HOA fees. You *may* receive a credit from the seller for some of these fees which would bring your closing costs down; this is determined during the negotiation for the house. *You will get a closing cost estimate from your lender when getting approved, but as your agents, we can give you a rough estimate based on your sales price as well when we sit down to do a buyer consultation.
Want to learn more about home buying costs? Reach out to us!
Lauren & Cambron | Lauren Zurilla & Associates