Check Please Costs Often Overlooked By Home Buyers

Dated: 06/03/2015

Views: 483

It is natural for buyers to anticipate their down payment and closing costs when they are making sure they have all the money they need saved up for their purchase. However, there are a few expenses that often surprise buyers. Its not that they don't know about them but sometimes they just get overlooked.

#1 - Earnest Deposit 

This is a check you write to show your good faith in the transaction. It is typically 1% of the sales price for FHA or VA financing, between 2-5% for Conventional financing, and 5-10% (sometimes higher) for a cash purchase. These funds are deposited upon offer acceptance and held by title through the escrow period. They are credited to a buyers costs and any unused funds are returned to the buyer.

#2 - Inspection Costs

After an offer is accepted you have 10 days to complete any and all inspections that are important to you as a buyer. Typical inspections in our area include a home inspection & termite inspection. There can be other inspections depending on the type of property and whether or not there is a pool, well, septic tank, or other item that requires additional inspections. Home Inspection costs are based on the size of the home. The larger the home, the greater the inspection cost anywhere from $250-750 (or higher). Payment is made to the inspector at the time of inspection. Termite Inspections can be included in with a home inspection or done by another company and range from $25-75. Termite Inspection costs cannot be paid by VA buyers and is paid through escrow by the seller.

#3 -  Appraisal

If you are buying a home with a mortgage your lender will require an appraisal. Buyers are required to pay for the appraisal up front. The cost of appraisals vary by loan type, but figure about $600.

#4 - Home Warranty

In a buyers market you can often get the seller to pay for a home warranty, not so much in a sellers market. If you want to have a home warranty (and I recommend you really consider getting one) and the seller won't pay for it anticipate an extra $300-1000 being needed at closing depending on the coverage you need and the company you choose.

Those are the 4 common expenses that buyers don't think about until they hear, check please! Make sure you have taken these costs under consideration as you make your preparations to buy a home.

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