Buyers: Remember to Prepare for These 4 Costs
Here are four costs for homebuyers to be aware of.
I know that buying a home can be a really exciting process, and that’s why today I wanted to share a few tips if you’re in the market to buy. In order to properly budget for this venture, there are a few upfront costs that you should be aware of before you start shopping for homes:
1. Down payment. Your down payment can range anywhere from 0% up to 20%+ depending on your lender and financial situation. So before you begin your home-buying journey, speak with your lender about your down payment. How much can you afford? What kind of lending programs do they have available for you?
2. Earnest money. Once you find a home that you’re crazy about, you’ll write an offer on it. Clients are often blindsided by the earnest money deposit. This is simply a deposit that shows the seller that you’re serious about the transaction. It’s not always necessary, but in a market like Seattle, we strongly encourage it. Typically, the earnest money deposit is around 1% to 3% of the purchase price of the home.
"Knowing that you have funds set aside for all these fees will make the whole process much easier."
3. Inspection. The inspection is a very important part of the buying process because it will point out any of the faults or issues in the home before you go through with the purchase. For the inspection, prepare to pay $400 to $500 up front, depending on how large your home is.
4. Closing costs. Before we even put the offer down, I like to have my clients meet with their lender, who can help them estimate how much they’ll have to pay in closing costs. Typically, you’ll want to set aside around 2% of the purchase price so that you have it ready to go when it comes time to close.
If you have any questions about these or other upfront costs, feel free to reach out to me. I’d love to speak with you.