A Buyer’s Guide to Upfront Home Buying Costs When looking into buying a new home and looking at the budget for one, most of us immediately turn our search to the monthly mortgage payment. Sometimes we forget about the upfront costs of closing on the home loan and purchase to make the home ours.

Upfront costs are one-time expenses that are paid by every home buyer after an offer is made and accepted on a home. Here is a list of traditional upfront home buying costs to remember and budget guideline when considering a home purchase.A Buyer's Guide to Upfront Home Buying Costs

The Down Payment

This is perhaps the most significant upfront cost. In some cases the amount of money you have to put down on a home can determine the type of loan you will qualify for and the amount of money a bank is willing to lend to you. A down payment is traditionally anywhere from 5 to 20% of the total purchase price. With some loans, buyers can put as little as 3% down.

Related: Pre-Approval Vs. Pre-Qualification

Earnest Money Deposit

Earnest money is an amount of cash you submit to the seller with your purchase offer. This shows the buyer you are serious about your offer on the property. This is also called a “good faith deposit” as it is non-refundable if you walk away from the home for any other reason than what is stated in the contingencies of the contract. This amount can be applied to the down payment or closing costs when the purchase finalizes. Most buyers offer 1 to 2 % of the offer price.

Home Inspection

It is always wise to include a home inspection contingency in the purchase offer. This states that you would like the home’s overall condition inspected by a licensed professional. Your real estate agent can recommend some inspectors they have worked with. It is good to do your own homework on inspectors in your area to make sure you are choosing a well-qualified and thorough inspector. This can cost anywhere from $300- $500 or more if you need a specialized inspection.

Closing Costs

These are the costs that accumulate to finish paperwork, pay realtors, and other third parties helping with the sale transaction. These costs usually include:

  • Government recording costs
  • Appraisal fees
  • Lender origination fee
  • Title services
  • Survey fees
  • Attorney fees
  • Underwriting fees
  • Notary fees at signing

Many times a large amount of the closing costs, or all of the closing costs, can be rolled into the home loan.

Moving Expenses

Moving expenses can vary greatly depending upon the method you choose. Regardless, there will be at least some expenses. If you plan to do all the work on your own you will still need a vehicle to move stuff, to pay for gas in the vehicle, boxes, tape, padding for fragile items, etc.

For help buying a home in Central Indiana please contact us any time. We would love to help you find a home you love in today’s sellers’ market.

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