When purchasing a home, the first thing we usually think about is our price point – what can we comfortably afford based on our income, expenses, and loan options? We also like to dream about the furniture, drapes, and the colors that we will paint our new home. But it’s important to look at the overall expenses involved when purchasing a home so that those costs are included in your budget. These expenses/fees may affect your price point and the type of home you purchase. Let’s take a look at the top 5 costs associated with purchasing a home.
Downpayment: Many folks think you need 20% down to purchase a home, that is not always the case. There are all types of options including 0% down. Different loan options are available based on your income, credit score, debt to income ratio, etc. The best way to find out what you qualify for and how much down payment you will need is to chat with a mortgage lender. This is the first step (and the most important) in your journey to home ownership.
Closing Cost: This will vary based on the sales price of the home but we typically see closing cost around 2.5% – 3% of the sales price (give or take). If you’re curious on the breakdown contact me and I can send you a more detailed summary.
Earnest Money (EMD): Along with the sales contract, the EMD is a buyer’s way of showing that they’re serious about purchasing the home. The money is held to protect the seller’s interest. Typically we see an EMD around 1%-2% of the sales price. This money is credited back to the buyer at closing.
Home & Radon Inspection: Although this is not a requirement I highly recommend that all buyers get a home and radon inspection. This allows you to walk the home with your agent and home inspector to determine that all items are functioning normally (HVAC, washer/dryer, stove, etc) and gives you a chance to learn how your new home operates. Additionally, if there are issues, you can address those with the selling side to determine a solution or if you’re going to move forward with the purchase. A home inspection typically cost $650-$850 depending on the size of the home. Radon Inspections run $140-$150. For more info on Radon, click here. You may have additional inspections if the home has a well, septic, pool, etc.
Moving Expenses: The cost can vary. If you have a large home with a lot of “stuff” it can run you thousands of dollars. Across town versus across country can be even more. I recommend getting a few quotes to make sure you are getting a fair price and always make sure they have insurance! If you decide to pay your friends in pizza and beer for helping you move understand that things may break!:)
If you have any questions or would like to set up a home search to see what’s out there. Text/Call/Email @ email@example.com or 703-785-8203