Saturday, September 23, 2006

Buying a Home: Up-Front Fees

In this land of milk and honey where buyers are now able to buy homes at time with little to no money down, don't think you can walk into a new home with nothing out of pocket. The list below shows what kind of expenses you'll be expected to pay out of pocket right away:

Earnest Money shows you are sincere about buying a home. Earnest money will go into an escrow account and it will be applied to your loan, closing costs, etc. at the time of closing. Sometimes buyers get this money refunded, depending on your contract. How much? Anywhere from $250 to $500 to $1000 is good. The more you can put down, the more serious your seller will consider you. This money is due when you write the contract.

Credit Report is what your lender will pull to see if you're credit is strong enough to qualify for a home loan. The amount varies by lender, but expect to pay between $35-$75 once you are in a "binding" contract and make formal loan application.

Appraisal must be done when you buy a home, unless you're paying cash. This will cost between $300 - $400 and is also paid at loan application to the lender.

Home Inspection is not mandatory but strongly recommended. A home inspector must be licensed by the state and the inspection will cost between $250 and $350 depending on the inspector, size of home, and scope of inspection. You will pay the inspector directly at the time of inspection.

Well Water Test is usually required by lender if the home uses well water rather than city water. The water is tested for safety, ensuring no bacteria causing illness. You can also get an idea if there is sulfur in the water at this time. Cost is approximately $35 and is due at the time of testing.

Septic System will be tested if home is not on city sewer. This ensures that the tank is not full and field is in good working order. Cost if between $150 and $200 and is usually paid at closing.

Termite Inspection is conducted to ensure there are no wood damaging organisms (termites, mold, etc.). The termite company is usally paid at closing and costs $35 to $75. When I represent a buyer, I like to pick the termite inspector so we know the inspection is being done professionally and honestly. Shout out to my guy at Bert's Pest Control - he can be reached at 848-0906.


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