6 Home Buying Costs You Might Not Be Aware Of
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Many people assume that the only cost associated with buying a home is the down payment for the home. However, when they begin the home buying process, they soon realize that there are other home buying costs to plan for that they were unaware of. This list of six costs will help you know how to plan your finances before purchasing a home.
#1 Home Inspections
If you plan to buy your home using a lending institution for financing, then you are likely to need a home inspection as well as a pest inspection. These inspections, even if not required, are a good idea so that you will know of any potential problems with the home.
Cost:
- Home Inspections range in price from $225 to $450
- Pest Inspections are about $100
#2 Discount Points
Some buyers choose to pay money up front in order to get a loan with a lower interest rate. The money you pay upfront is known as discount points.
Cost:
- Each discount point is 1% of your loan amount. So, if you have a $100,000 loan, then each point would be $1,000.
#3 Things for Escrow
Lending institutions require that you put money into an escrow account. This money will help you cover financial obligations that are coming in the future for things such as homeowners insurance, property taxes, or even interest due. Then, when these items come due, the lending institution takes the money out of escrow and pays the bills for you.
Cost:
- Property Taxes and Homeowners Insurance: You could be required to pay up to 12 months of property tax and/or 12 months of insurance in advance.
- Interest: This depends on your loan amount, the current interest rate, and when during the month you close on the loan.
#4 Closing
In addition to your down payment, you may also have to pay closing fees as part of your home buying costs. How much will depend on the contract you sign and the lending institution you use, but a typical closing will cost between 2 and 5% of your loan.
Cost:
- Loan origination fee: Up to 1% of your loan
- Credit Report: Up to $65
- Title Work: Between 0.75 and 1.5% of the loan
- Survey: Up to $400
- Appraisal: Up to $450
- Escrow Fee: About $2 per $1,000 of loan plus $250
- Other Fees: These can include flood life of the loan, tax service, and government recording. These fees vary according to the home and area.
#5 Cost of Moving
Moving into a new home will cost money, even if you do it yourself.
Cost:
- Professional Move: Average about $1200 within state and $5600 between states
- DIY Move: Average about $300
#6 Getting Settled
Depending on your situation, you may find that you need several things in order to live comfortably in your new home. These home buying costs could be things like lawn equipment, furniture, and appliances. You may also need to pay utility deposits.
Cost:
- This is a varied cost and depends on your situation.
Thinking about these home buying costs before you buy is a good way to help you make appropriate financial plans. If you’d like to understand more about the costs of buying a home, please call us today.