What are my out-of-pocket expenses?
When purchasing a home, there are several expenses to budget for. Here is a checklist of items to be pre-pared for:
□ Once you found the perfect home, it is critical to speak to a lender to go over down payment options and closing costs on a home. Sometimes, the closing costs can be negotiated to be paid by the seller. However, without knowing which mortgage product you are going with, it will be difficult to estimate an accurate amount.
□ After your offer has been expected, it is important to immediately proceed with the home inspection. The home inspection prices typically are based on square feet, and services selected. The average home inspection price is around $350-550. Additional services, such as radon testing, will typically add another $100-200 per service provided.
□ After your home inspection, the next step is to proceed with the appraisal. This is the only typical out-of-pocket expense connected with a mortgage. If the seller is paying closing costs, the appraisal fee can sometimes be refunded back to you, as long as it can be proven it came out of your bank account, the program allows the refund, and there are enough seller concessions. The appraisal fee will typically be between $400-$550, depending on the appraiser, square footage, location, and mortgage product.
□ Depending on what the appraiser reports about the home, additional expenses can be required. If the appraiser says the house does not meet the mortgage program standards, repairs will be required to bring the home up to standard. (This happens about 25% of the time.) If the repairs are items such as chipped paint, utilities are not turned on, air conditioner is not working, etc.., the seller will need to make the repairs and we will need to get the appraiser back out to the property to do a final inspection. The cost for the final inspection fee is typically $125-200. If the appraiser recommends an inspection for the septic tank, mold or termite damage, etc., the inspection is typically a buyer fee, and if the results show something needs to be fixed, the cost to repair is typically a seller fee. After the repairs are done, a final inspection will need to be done. With a good home inspection, most of the time this can be prevented.
