How do You Estimate Costs When Buying a House
We’re all aware that buying a home requires a pretty sizable cash outlay for the down payment and at least some of the closing costs. There are, however, many more costs involved in buying a home, including earnest money deposit, inspections, appraisals, and moving expenses. A lot of it, of course, depends on the size of the home and the amount you finance. So before taking that big-money plunge, you should probably spend some time estimating costs when buying a home in Floresville.
1. Earnest Money Deposit
When you make an offer on a home, you need to be prepared to put up an earnest money deposit. The purpose of this deposit is to show that you’re a serious buyer, and, as a result, the seller will halt other deals. The amount of the earnest money deposit depends on the sale price, generally somewhere between 1% and 5%. When an offer is accepted, the title company will deposit the EM into an escrow account until closing. At closing, it is credited back to the buyer.
In the excitement of buying a new home, people often overlook inspection expenses in estimating the costs when buying a home in Floresville. But if you’re financing with a lender, it’s a cost you just can’t get around. Typically, the inspection takes place within 10 to 15 days of the contract’s approval. A thorough home inspection can set you back over $350. And if you have a VA loan, there is the cost of a termite inspection. But the VA buyer does not pay for that inspection; it is paid as a non-allowable by the seller but it is an inspection that the buyer arranges to have done.
If you’re not paying cash, here’s another unavoidable cost because your lender will demand an appraisal. Rarely, sellers will pay some or all of the appraisal fee, but that’s not something you can count on. And often the cost of the appraisal is figured into the closing costs – it may be hidden this way, but you still have to pay it. Typically, an appraisal will cost you at least $450+. This is something that the lender orders but the buyer pays for it before it is ordered.
4. Closing Costs
And, of course, you have to factor in closing costs. While it’s true that sellers, in rare instances, may offer to pay the closing costs (make concessions) to make the sale more attractive, more often it’s the case that they’ll pay only a portion if any at all. While a seller can contribute to closing costs, the type of loan can determine how much a seller can contribute. A VA loan requires a certain amount of concessions as the buyer is not allowed to pay those costs such as termite inspections. An FHA loan allows up to a % of the sale price in concessions but it is rare that a seller would give that amount in concessions as it affects the sellers’ net proceeds.
These closing costs are third-party and lender fees that you pay when the transaction is finalized and they can include fees for wire transfer, survey, underwriting and origination, credit reporting, document preparation, title insurance, and recording. Closing costs generally run in the range about 4% of the sale price – a pretty substantial amount, actually.
5. Moving Expenses
When estimating the costs when buying a home in Floresville, many people neglect to figure in moving expenses because they aren’t part of the actual purchase. Still, it’s something you’ll have to pay even if you’re moving to a new home within the same neighborhood.
If you don’t have a truck and/or a trailer and some energetic help, you’ll probably have to hire a professional mover, especially if it’s a long-distance move. If the move isn’t all that far, say, within 20 miles or so, you’re looking at around $1,000. If you’re relocating across the country, it could run you as much as $5,000 or more.
So if you’re moving to another state, it’s probably a good idea to sell as many of your larger possessions as is feasible. In some cases, for a truly long-distance move, it can be cheaper to buy new furniture for your new home than to pay for moving your current furniture.
Obviously, in estimating the costs when buying a home in Floresville, you need to look far beyond the down payment and closing costs. There are, however, alternative home-buying options that may help you pay a lot less up front.