My wife was a first time home buyer when we purchased a home for sale in Locust Grove, VA.  While she knew about the down payment and title work fees that we would have to pay, she was caught off guard by others.  When you are purchasing a home, there can be some unexpected upfront home buying costs that catch many first time home buyers off guard. Be better prepared by having an idea of the costs associated with a home purchase. 

Here’s a breakdown of the most common home buying costs.

  • Earnest money deposit: A gesture of your serious intent to purchase, an earnest money deposit is typically one to three percent of the sales price of the home. You pay it once you have a ratified contract on the home.
  • Home Inspection: After you’ve found a house, you inspect it. The cost of a home inspector ranges between $300-$500 depending on the size of the home. The buyers pay for the inspection once it has been completed.
  • Pest Inspection: An inspection to look for termites or other wood destroying insects can be required by mortgage lenders. The cost for the inspection is usually around 100 dollars. The buyers or sellers pay for the inspection after it is completed.
  • Water Quality and Septic Inspection: If you are purchasing a home that has a well and septic system, then those need to be checked. The cost of a water quality test is about 150 dollars. The cost of a septic inspection ranges from depending on the type of inspection you decide to do. The buyer or seller pays for the inspections after they are completed.
  • Credit Report Fee: When you apply for a mortgage, the lender will run your credit report. There is a small $20-$30 dollar fee with this. You can pay it up front or roll it into the other closing costs that you pay at closing.
  • Appraisal: An appraisal is a third party assessment of the value of the home you are purchasing completed by the bank. The cost of an appraisal ranges from $300-$500. Buyers pay this fee as part of the closing costs on the day you purchase your home.
  • Closing Costs: This is a bundle term for all the fees that you will pay when closing on a home. It is typically two to five percent of the purchase price of the home. These fees usually include payment to the title company for the work they did, title insurance, underwriting fees for your mortgage, and any taxes. You will find out from your title company how much money you need to bring a few days before closing.
  • Insurance: Homeowners insurance needs to be in place before you close on your home, so that coverage starts as soon as you close. You can shop around at various insurance agencies to find a policy that works best for you. Some mortgages also have private mortgage insurance or PMI. This is included in your monthly statement, but it is an additional cost.
  • Survey: If you are purchasing a piece of land, then you may want to complete a survey to know the exact property boundaries. Sometimes a lender may also require this. The cost of the survey ranges depending on the size of the property. It is paid for by the seller or buyer.

As a first time home buyer knowing about these additional home buying costs will help you feel more prepared in your home buying journey.