Buying a home is truly an exciting time especially for first time owners. Unfortunately, many are unaware of the costs of buying a house.
The Costs of Buying a House
Escrow
Once you’ve found the house you want, and have agreed upon a price, you’ll want to begin the process of getting the house inspected and appraised. To hold your spot, so to speak, you’ll provide earnest money that is given to a third party in check form. The amount varies but it is used to confirm a buyer’s intent to follow through with a purchase. Should you choose to walk away from the house, the sellers will receive the check in payment for time lost on the market. If you purchase the home, the earnest money will be applied against the house’s sale price.
Home Inspection and Appraisal Fees
A home inspection is the thorough examination of a home’s present condition including the quality of the roof, HVAC system, electrical wiring and plumbing. The average cost for a home inspection is between $300-$500. An appraisal is an unbiased opinion of the value of a home. This value is determined by comparing the home’s condition to other comparable homes in the area. From these comparisons, the appraiser will assign a fair market value to the home. An appraisal costs between $300-$400.
Land Survey Fees
Although land surveys are not necessary, if there is any question of boundary lines on the property, a land survey can help clear those up. A land survey is basically a map that helps clearly define the property line. If you choose to do a land survey, they range in cost from $200-$1,000.
Down Payment
Depending on the type of loan you use, the down payment ranges anywhere from 3% to 20%. The higher your down payment, the smaller your mortgage. Although it’s possible to make a down payment as low as 3%, if the money you are bringing to closing is less than 20%, you will be required to get mortgage insurance; either Private Mortgage Insurance (PMI) or FHA insurance.
Closing Costs
On occasion, sellers will offer to pay closing costs to sweeten a house deal. However, you shouldn’t be expecting that. Closing costs include all the fees required to successfully close on a home. There are many moving parts and many people who need to be paid for services rendered. Closing costs are on average 2% to 5% of the purchase price.
Homeowner’s Insurance
Before you close on your home, you will be required to show proof of Homeowner’s Insurance. This insurance covers damage to the interior or exterior of your home as well as recovery of damaged personal property or injuries occurring while in the home.
HOA fees
If you live in a neighborhood that has a Home Owners Association, you may be required to pay HOA fees shortly after closing.
Renovations
Not all homes are move-in ready. There may be expenses like fresh paint or a new roof required prior to moving into your home. These costs will vary in amount but are worth noting as part of the cost of purchasing a home.
Initial Utility Costs
Prior to moving into a new home, all utilities including water and electricity must be turned on. Depending on whether this is a local move or not, you might be required to make a large deposit in order to begin services.
Moving Costs and Cleaning Fees
Once the home is ready to move into, there’s the cost of properly cleaning the home. In addition, there are packing and moving costs. You can save a little money if you recruit friends and pay in pizza!
Buying a home can be a truly rewarding experience. Just make sure you are prepared for all the costs and hidden costs that will sneak up on you.
If you’re ever in the market to sell your home, we’d love for you to experience the “Ben Buys Indy Houses” way of doing business. Ben is an accredited Indianapolis Home Buyer purchasing homes in AS-IS condition. You won’t be disappointed with our services but don’t take our word for it. Check out what one of our clients had to say about the process.
