Being a First Time Home Buyer in 2021 has its challenges, but with all the right knowledge, expectations, and help throughout the buying process it is sure to be a fun and exciting experience!
Let’s visit the expenses you might face between going Under Contract to the Closing Table. This will help you budget properly which can eliminate the stress of the purchase:
Earnest Money Deposit
For a standard closing, you’ll be faced with needing to have Earnest money is a “promise” to the seller that the buyer will act in good faith.
How Much:
Typically, the earnest money is 1% of the purchase price and it is always negotiable. Earnest Money is a part of the upfront down payment, but there are many ways to have your Earnest Money returned throughout the contract if you do choose to terminate before closing.
Down Payment
I bet you’ve heard to save for a Down Payment and It really depends on what type of loan you have.
How Much:
Here are a couple of loans you may be choosing from...
- Down payment assistance programs —- 0%
- Portfolio Conventional Loan —- 3% (of purchase price)
- FHA (Government Loan) ——– 3.5% (of purchase price)
- Standard Conventional ———- 5%-20% (of purchase price)
- VA Loan —————————– Funded Down payment
Inspection
Down the line of the transaction you, as the buyer, will most likely be getting an Inspection. Though it’s not required, it is recommended.
How Much:
The price of the inspection depends on the size of the home and can range between $200-$500 for an inspection of the Full Health of the House.
There are also specialized inspections you can choose to get such as...
- Radon Testing
- Mold
- Sewer
- More
The prices of these inspections depend on what company you order them through.
Appraisal
The next expense Appraisal – price evaluation of the home.
The lender will order the appraisal and the price depends on the location of the home.
How Much:
It can range anywhere from $650 and up.
Closing Costs.
When you hear “Closing Costs,” think of, “A Lot”. These are typically the cost of obtaining the loan, lenders fee, prepaid.
How Much:
You may see this range from 1%-6%.
Closing Fee
When thinking of “Closing Fees” think, “A little”. This is the Title Company Fee (Secretary fee) and whoever benefits – pays, so in this case, both the seller and the buyer typically split the payment, but it is always negotiable.
How Much:
The closing fee will vary depending on the Title Company and typically they are $375-$450
Other expenses
You may come across depending on the home you are purchasing may include...
- HOA– Some HOAs may require pre-paid a couple of months in advance and there may be HOA transfer fees, but it is negotiable if you or Seller will be paying for it.
- Title Policy Fee– Depends on the price of the house, if you refinanced recently and county your home located in this fee will vary as well, but the starting price will be around $1,200 and up
Being a First-Time Home Buyer can be a very exciting and fun experience especially when you are prepared with all of the information that will prevent any surprises to come up during the process. Buying a home is a process and understanding that makes it that more enjoyable.
