Buying a home comes with its fair share of costs, some of which can be unexpected. This guide will help you understand and prepare for these expenses, focusing especially on the major ones, prepare you for a smoother home buying experience.
Earnest Money
This is an upfront deposit you make when presenting your purchase offer, indicating your serious intention to buy. The general amount is 1% if you’re securing finance, or 10% if making a cash purchase.
Option Fee
Buyer gives this fee to seller for the right to conduct inspections within a set time frame. It is typically ranging from $100-300. It’s money well spent as it gives you the option to withdraw from the contract if inspection results are unsatisfactory.
Home Inspection fee
Depending on the property, you may need to have various inspections, such as structural assessments, water well or septic tank evaluations, each incurring an individual cost. A typical structural Inspection fee range between $250-500, depend on the size of the house.
Appraisal Fee
The property’s value is determined through an appraisal, usually costing around $400. This will be added to closing costs.
Down Payment
In most cases, a minimum 3.5% down payment applies for FHA loans. There are exceptions for low-income down payment assistance schemes, and VA loans which require no down payment.
Relocation Costs
The expenses of moving depend on the distance and whether you do it yourself or hire professionals. A local self-move might cost around $1,000, while professional movers for the same area could cost between $2,500-$6,000 for an average-sized home. Long-distance relocations will increase these costs.
Ongoing Home Expenses
Once you’re a homeowner, anticipate ongoing expenses for home improvements or maintenance. It’s important to have a cash reserve for these, as maintaining your home equates to preserving your investment.
Home-ownership is more than just purchasing property; it’s about managing the costs that come with it. By knowing and planning for these expenses, you can safeguard your investment and enjoy your new home without financial stress.
