Up-Front Costs

BUYER'S UP-FRONT COSTS

The following are out-of-pocket expenses to the buyer that are paid prior to closing on a property...

*   Mortgage application and appraisal fee:  Approximately $350-$500.  This is paid at the time you apply for your mortgage, which can be before or after you find the property that you want.  Many buyers are getting pre-approved for a mortgage rather than just pre-qualified.  A pre-qualification doesn't cost anything, but a pre-approval will carry more clout with a homeowner when you write an offer.

*   Deposit:  This amount will vary depending on your particular finances and type of loan, but generally you will need a check of $500-$1000 to accompany your written offer to purchase and an additional amount shortly after acceptance of your offer, usually 1-7 days.  This additional amount is generally $1000-$9000 more, depending on the buyers' individual situation and the value of the home.  A good estimate is approximately 3-5%.  Both deposits are part of the total down payment required by the lender.  As an example, if you are buying a house for $100,000 with a required down payment of $10,000, you might give $500 with the initial offer, $3000 after acceptance, and the balance of $6500 at closing.  In this instance you would be mortgaging $90,000.  Please keep in mind, however, that there are many loan programs for first time buyers that require as little as 3% total down payment.  Also, if you can afford to put 20% down, you eliminate the cost of private mortgage insurance (PMI) which is required when the down payment is less than 20%.

*   Inspections:  Approximately $400-$600.  This amount can vary depending on what inspections you choose to have performed on the property.  All inspections are at the buyers' expense.  Almost everyone has a home inspection, termite and wood destroying insect inspection and a radon test performed.  Additional costs would be incurred if the property you were purchasing had a septic system instead of public sewers and/or well water instead of public water.  You can expect to pay approximately another $275 if you need water and septic tests.

*   Home Owners' Insurance:  You will be required to have a full year's paid home owner's insurance on the property you are purchasing prior to closing.  Costs on this vary, but a ball park figure is $600-$800.

*   Total Up-Front Costs:   Average figure $1800-$2000 plus whatever deposit monies you are putting down.