5 Expenses To Budget For When Buying A Home
Posted on: 7 January 2021Share
Will you be purchasing a home in the near future? If so, know that there are a lot of costs involved with buying a home that you need to have on hand. Here are some of the expenses you can expect when purchasing a home.
The Down Payment
You are likely going to need some sort of down payment when purchasing a home, which will depend on the type of mortgage you are looking for. While you ideally want to have 20% of the home's purchase price to avoid paying private mortgage insurance and to receive a lower interest rate, that is not always an option. An FHA or conventional loan is going to require a down payment as low as around 3% for you to move forward with the home purchase.
The Earnest Money
You'll be expected to provide some sort of earnest money to the seller when your offer is accepted. This is money given to the seller to show that you intend to move forward with the home purchase. The earnest money will go toward your down payment when you close on the home, but you can't get it back if you decide to randomly walk away from the sale. There must be a valid reason for the sale to fall through to get your earnest money back, such as not being able to secure financing.
The Home Inspection
The first expenses you'll have after having an offer accepted on a home are the fees associated with a home inspection. Consider this an essential part of buying a home, since it is the only time that you will have to allow a professional look for potential problems with the home. This can give you peace of mind that everything is in good condition or raise a red flag that lets you move on to another property.
The Legal Costs
You'll need to have a lawyer on your side to help draft any contracts between you and the seller, read over contracts, and even perform a title search. It is common for real estate transaction lawyers to only charge for their services if the sale of the home goes through, with it typically being a flat fee based on the price of the home.
The Closing Costs
Your mortgage is going to have a variety of closing costs associated with it, which include the fees owed to the lender for mortgage origination and things of that nature so that the lender can make a profit off your home purchase. Be prepared for these fees that are in addition to the down payment that you owe.
To learn about homes for sale in your area, contact a real estate agent today.