The Costs to Expect when Buying a Home

Outside of the down payment and mortgage payment, there are a few additional costs that may arise when buying a home. Our hope is to make you aware of each potential expenditure so you can plan and budget accordingly! Nobody likes surprises when it means spending more money.

Before closing, you will receive a settlement statement from the escrow company to review, which we will also review to make sure everything that was agreed upon made it into this document. This list includes your payment and the various fees you may be charged by your lender.

A good rule of thumb is to budget 2.5% - 3% of your loan amount to cover closing costs. Listed below are a few of the costs you may encounter.

• Earnest Money

  Typically 1-5% of the purchase price, due to the closing company 1-3 days after your offer is accepted. This counts toward your down payment amount, and is considered a “good faith” deposit for the seller. This money is protected by the contingencies in your contract.

• Home Inspection

  $500+ (depending on the home size). This is paid directly to the home inspector on the day of inspection.

• Appraisal fee

  $600-$1000, due 2+ weeks after your offer is accepted or paid at closing. This is a fee your lender charges to appraise the home value for the loan they are issuing.

• Credit Report

  $30-50, paid at closing. This is charged by your lender.

• Mortgage Points (if applicable)

  Typically 0.5-1.5% of the loan amount, paid at closing as an “up front” interest payment, reducing your interest rate and thus, your monthly payment.

• Title Insurance

  $800-$1500, paid at closing.

• Escrow Fee

  $1,500-$1,800. This cost is charged by the closer for their services and is typically split with the seller at closing.

• Loan Processing & Underwriting Fees

  Variable depending on the lender. These fees are paid at closing.

• Recording Fee

  $300-$700. This is paid to the county at closing to record the sale of the home and register you as the new owners.

• Courier/Notary Fees

  $50-250. These fees are higher if you are planning to sign your closing documents remotely.

• Property Taxes

  Your property taxes are pro-rated based on the closing date, with the seller paying for the time spent in the home up to closing, and buyer paying for anything remaining, if necessary.

• Prepaid interest

  Prepaid interest is the amount of mortgage interest you pay upfront at closing to cover the time between your closing date and the end of that month.

• Home Insurance

  At closing, you typically pre-pay your first year of homeowners insurance in full, which is required by most lenders.

Not all closing costs are fees! Some of these costs may be negotiable or covered by the seller. We will help you strategize to make sure you don’t pay more than you need to.