First time home buyers are sometimes caught off guard by all the costs associated with buying a home. Yes, there is the purchase price and down payment, but there are other costs involved in the process. When you are creating a budget for your new home purchase, it is important to factor these things in too. Plus, knowing about these things ahead of time will help you be prepared when searching for homes for sale in Locust Grove and the surrounding area.
When you are creating a budget, make sure to add all of these additional items. Depending on the home, you may not have all of these additional costs, but if you do, you will be prepared.
Earnest money deposit: A gesture of your serious intent to purchase, an earnest money deposit is usually one to three percent of the sales price of the home. The earnest money is deposited to a designated third party identified in your specific contract (ex: real estate settlement/title company, real estate brokerage, or real estate attorney) when the buyers and sellers ratify, or sign off on, the proposed contract. This means that you will pay for this upfront before you own the home. To learn more about who and where this money goes, read more about earnest money deposits here.
Home Inspection: In a real estate contract, buyers have the ability to complete a home inspection to learn more about the condition of the home they are going to purchase. The home inspection is completed by an independent certified home inspector that the buyers hire. 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 depending on who is designated in the contract.
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 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 bank or mortgage company does this to ensure that the buyer is not paying more for the home than what it is valued at on the market. 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.
When you are looking at homes for sale in Locust Grove, knowing about these additional costs will help you feel more knowledgeable about this big investment. While some of these costs are standard, others can vary depending on the type of mortgage you are getting and the size of the home or property.
