If you are a homebuyer, you might get sick when the last line of your good-faith estimate comes in at several thousand dollars. You may also be more than troubled by some of those fees. Knowing what you are paying, like the ten listed below, can ease the pain of writing checks.
To prove that you are committed to your purchase, expect to put down 1% to 2% of the total purchase price as an earnest money deposit. This price can change depending on market factors such as if demand is high in your area. If the market is cold, the seller could be content with less than 1%. Governing factors such as state limitations and rules can cap how much earnest money a seller can ask for.
An escrow account is the way your mortgage company can ensure you have enough money to cover related taxes and mortgage insurance. The amount you need to pay varies by location, lender, and loan type. It could cover costs for a few months or up to a year. Escrow accounts are common with loans with less than a 20% down payment and are mandatory for FHA loans, however they are not required for VA loans.
This is the fee you pay the loan officer or broker for completing the loan; this also includes underwriting, originating, and processing costs. A typical origination fee is 1% of the total loan amount, but it can vary. Use your good-faith estimate to shop around.
You want to be sure that your new home is structurally good and free of surprises such as leaks and pests. These assurances do come with a price though.
- A good inspector should be able to identify structural issues, flooding problems, and any other potentially serious problems. You should expect to pay between $300 to $500 for a home inspection, but costs do vary.
- A radon inspection is a EPA- recommended step because this will determine if you home has elevated levels of the cancer-causing agent. A radon inspection can cost several hundred dollars.
- We suggest you invest in a pest inspection. Roaches are one thing, but termites are a whole different story. Expect to pay $150 for a termite inspection.
Some states require an attorney to be present at closing, but other areas this is optional. If you do decide to use a lawyer, be prepared to cover the costs, which vary on lawyer and area. It is typical for mortgage companies to have a lawyer on their end, although they should be covering the bill.
Just because you can get your credit report for free does not mean that your lender can. You will have to reimburse your lender, typically around $30.
If you live in a hazard-prone area, you might need to purchase extra insurance, such as flood.
Your lender will not provide you with a loan for a home without knowing what its fair market value is. An appraisal will cost between $200 to $400, depending on the size and location of the property. Be sure to check out our blog post as to what an appraiser does.
You pay this to the title company to make sure your property’s title is free and clear. Your lender will recommend a trusted title company, but you can also shop around for one.
Your lender may require a professional surveyor to determine exactly where your property lines are drawn, however this is not always required. Prices vary widely, but expect to pay at minimum $100.
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