There are very few expenses that you can expect before your actual closing. At closing you will be expected to have your down payment and closing cost wired to your Title Company. But there are some expenses you will need to have cash on hand for:
1. EARNEST MONEY – Earnest Money is money that you will provide to your Realtor once you are in contract on a home that will be deposited and held as a good faith deposit to show the Sellers that you are earnest about buying their home. At your closing, it will be reimbursed to you, and it will be used toward your closing cost. Earnest Money is generally 1 % of purchase offer. There’s only one reason why you wouldn’t recoup this money, and that is if you pull out of your contract after all contingencies have been met.
2. HOME INSPECTIONS – When buying a home you should always have it inspected by a certified Home Inspector. A home inspection will help to find any issues that need attention on the home and will uncover any major structural, electrical, or plumbing problems that will need to be further addressed and remedied. Other inspections that you will need to consider are Radon and Pest. Your prices for the inspections can vary but will be around $400 to $500.
3. LOAN APPLICATION – Some lenders will require you to pay a loan origination fee when apply for your loan. This will not happen until you have found your home and are in contract. Depending on the lender it will be around $300-$500 So expect to spend between $1200 to $2000 before closing in addition to your down payment and closing costs.
If you’re a first home buyer and you’re reading this and feeling a little overwhelmed at everything there is to learn, I get it! It’s confusing! I love helping first time home buyers navigate this process, and I’ve helped hundreds of clients just like you find their way home. Give me a call to discuss this so that we can find the best the option for you. Owning your first home may be closer than you think!
-Cindy
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