Tuesday, April 3, 2018 / by Laura Miller Edwards Realty Group
How much does it really cost to purchase a home?
Purchasing a home is a fun and exciting time in your life however can bring a lot of questions and uncertainties. The first step is contacting a qualified Realtor® to guide you through the home purchasing process. Step number two is talking to a preferred lender to get pre-approved and determine what you can comfortably afford so you don’t stay up late at night worrying. Once you have your home buying team by your side and selected the perfect home – now what?
Earnest Money – A seller wants to know you are serious about purchasing their home when they accept your offer. Earnest money shows the seller you have skin in the game and is typically 1% of the purchase price. Don’t worry this will be applied to your purchase at closing. The buyer’s broker immediately deposits the check into their escrow account. If not submitted with the offer, the earnest money check is required to be turned into the broker within 1-5 of days after you enter into a binding contract. A cashier’s check or personal check is acceptable – cash or money wire is not.
Inspection – Now that you are under contract on your dream home you will want have an inspection completed. A home inspection is a limited, non-invasive examination of the home’s condition conducted by a licensed inspector. The standard inspection typically runs about $400. A report is prepared by the inspector and presented to the buyer with the findings accompanied by photos. As a buyer this report is used to make an informed decision about their pending real estate purchase. Necessary repairs often can be negotiated with the seller. A home inspection report describes the home’s condition at the time of the report but does not guarantee future efficiency, condition or life expectancy of systems or components. During the inspection period a buyer can also choose to do the following inspections: radon, roof, septic, HVAC, termite, structural, mold – to name a few.
Appraisal – An appraisal is necessary when getting a loan from the bank. The bank uses an appraisal to confirm the home’s value. An appraiser researches the past sold homes in the area to determine the value, usually within the last six months. The finance contingency in your contract addresses the possibility of the appraisal coming in below the purchase price. It’s a smart idea to order an appraisal even if you are paying cash for the property.
Down Payment – The down payment is due at closing and applied to the purchase price. Down payments typically range anywhere from 3.5% - 20% depending on what type of financing the buyer is getting. Your lender will further explain the different types of down payment and loan options available to you.
Closing Cost – Closing cost are fees associated with purchasing a home and are paid at the closing. They typically run about 2.5% - 3% of your purchase price. Closing cost are a buyer’s responsibility but can be negotiated to be paid by the seller. The closing take place when the title to the property is transferred from the seller to the buyer.
Expenses at A Glance:· Earnest Money - 1% of purchase of price (applied to purchase at closing)
· Inspection – typically runs about $400
· Appraisal – typically runs about $400
· Down Payment – anywhere from 3.5% - 20% depending on your loan (your lender can confirm)
· Closing Cost – typically runs about 2.5% – 3% of your purchase price
Even though there are fees associated with purchasing a home, home ownership helps build wealth and provides a sense of stability. Many times, monthly mortgage payments are cheaper than your rent. In addition, you may have the possibility of tax write-offs! Interested in learning more? Call us today at 678-388-1400 to schedule your personal buyer consultation.