Many factors play into the decision on whether or not you are ready to purchase a home. For many buyers, one of the biggest determinants is whether or not they are financially prepared to take the plunge into home ownership. Many first time home buyers are familiar with the down payment required by many loan products, however, there are several other costs that should be considered before beginning the home search process. Let’s start the discussion with one-time expenses. Unless the purchase of the home you have under contract falls through and you need to begin again, the below expenses and fees are paid one time.
*Each expense will note an average cost, when it’s paid and by whom.
One Time Expenses
Credit Report: $30. Usually wrapped in your closing costs payable to the lender at closing. Buyer
Deposit: 1% of purchase price. Immediately upon acceptance of offer. Buyer
Home Inspection: $300-$500. Prior to or upon completion of inspection. Optional fee. Buyer
Flood Elevation Certificate: $200. If home is located in flood zone A or B, the insurance company will require an elevation certificate to give you an accurate quote. Buyer or Seller
Termite Inspection: $125. During the inspection period or within 30 days of closing. Buyer or Seller
Appraisal: $500. At the time the appraisal is ordered, usually following the home inspection. Optional fee if all-cash offer. Buyer
Down Payment: 0% – 20%. At closing. Down payment depends upon the loan product, i.e. FHA loan, VA loan, RD loan, conventional loan, etc. Buyer
Closing Costs: Up to 4% of the financed amount. At closing. Includes loan origination fee, application fee, underwriting fee, tax monitoring fees, flood determination fees, title insurance, recording fees, taxes and insurance, attorney fees, etc. Buyer or Seller
Home Warranty: $475. At closing. Optional fee. Buyer or Seller
Moving Costs: $1,000+Optional fee. Depends upon the number/type of items being moved, stored, transported, etc. Buyer
Next we will move on to the cash you’ll need after closing. These expenses include your monthly mortgage payment, utilities, homeowner’s association dues, etc. These expenses will vary greatly from purchase to purchase, unlike many of the aforementioned one-time expenses.
Ongoing Expenses
Principal, Interest, Taxes and Insurance: Monthly. These costs are often bundled into one mortgage payment where the lender pays the bank, city, state, government, etc.
Condo Fees: Monthly. If you own a condominium, your condo fees are often due on a monthly basis.
Homeowner’s Association Dues: Varies. If you live in a neighborhood with HOA dues, they may be paid on a monthly, quarterly or annual basis.
Utilities and Fees: Monthly. Regular water, gas, electricity, sewerage treatment and garbage pickup fees.
Termite Contract: Annual. If the previous seller doesn’t already have one in place you can assume, new contracts can run up to $1,000. Given our moist, humid climate, a termite contract is a great way to have peace of mind regarding protection against wood destroying insects.
Lawn Maintenance: Varies. If you plan on hiring someone to maintain your lawn and garden, consider the fees involved when budgeting for monthly expenses.
New Construction- Miscellaneous Expenses: Varies. If you purchase a newly constructed home, many buyers do not budget for costly items such as window treatments, fences, cabinet hardware, etc. When visiting new construction homes, take note of the items you will need to purchase prior to writing an offer.
