Costs of Buying a Home

By the time this article appears, the spring buying season will be in bloom.  How do you succeed in the market when buying a home?  One crucial issue is to know what it costs you in addition to the purchase price.  Be prepared by knowing what expenses you will pay:

Attorney Fees: It is beneficial to be represented by an attorney with deep real estate experience.  You’ll be able to get an estimate of the attorney fee at the time you interview candidates.  Although you may not be paying for their services until closing, it’s important to budget this in.  $1500 – $2000 is a reasonable expectation.

Home Inspection: The home inspection is your opportunity to find out the condition of what you’ve made an offer to buy.  This visual inspection of the home lets you know the condition of major house systems and provides a potential roadmap to replace some in the years to come.  The home inspector is paid the day of the service.  Inspection fees vary but budgeting $500 – $800 is reasonable.

Survey: This provides you with an updated look at fencelines and property lines.  It shows whether the neighbor’s shed is encroaching on the property or if you are able to get to all of your property on the other side of a fence.  The buyer will pay this fee at the time the survey is ordered.  Inspection fees may vary but budgeting $700 – $1000 is reasonable. This is generally after the contract is signed by both buyer and seller.

Homeowners Insurance: This is obtained before the closing and may require an entire year’s premium to be paid up front.  If you obtain a mortgage loan, insurance is required.  Insurance coverage can be several thousand dollars.

In addition, there are closing costs: 

Title Insurance – The possibility that someone has placed a lien on the property you are buying may be remote, but it’s worth the peace of mind.

Bank Fees – Cost to originate the loan, appraise the property, rate lock, points up front to lower your mortgage rate.

Property Taxes – Depending on when in the calendar year you close, the buyer may be reimbursing the seller for pre-paid property taxes on a per diem basis.  Using $18,000 as annual property taxes, you may need to budget half that amount to reimburse the seller at closing. 

Reimbursement for Oil in the Tank – If the home you buy is heated by oil, you may be reimbursing the seller for the oil in the tank.  A reading is done to determine how much oil is left in the tank.  This is generally part of your expenses at closing.  One hundred gallons at $3.59/ gallon would be $359 as an example.

Depending on the purchase, there might be additional expenses.  Your Real Estate professional can assist with referrals and more information about the home you want to purchase.

Wishing you success in your real estate journey!