Saving up for a down payment takes discipline and a little sacrifice for First Time Homebuyers. But buying a home takes more than just the down payment. Most First Time Buyers will use FHA financing, so the down payment will be around 3.5% of the purchase price. However, it’s the other costs than can trip you up and make closing a stressful situation, rather than a celebration.
In addition to closing costs (title, escrow and lender fees) you will have what are called non-recurring costs to set up your impound (escrow) account to pay for your property taxes, insurance and mortgage insurance as they come due. Many smart First Time Homebuyers are able to negotiate with the seller to pay all or part of these but here are some other costs you need to be aware of.
Appraisal fee. You often have to pay this fee out of pocket as part of the loan approval process. Depending on your location, the fee can run anywhere from $200 to $1,000.
Professional home inspection. Costs range from $300 to $800 for typical homes, but they can go higher depending on the age and type of structure. More specific inspections, such as those for structural engineering, mold and termites (all FHA loans require a termite inspection but the repairs are a cost generally paid by the seller) are additional costs.
Extra closing costs. Although the good faith estimate from your lender should be reasonably accurate, you won’t know the actual amount you have to bring to closing until a day or two beforehand. Don’t play it too close. You don’t want to hold up closing because you’re $100 short. The money you bring to closing almost always has to be in the form of a cashier’s check or wire transfer, so make arrangements a day ahead of time to take care of this.
Homeowner’s association fees. If you’re buying in a subdivision, you may pay an annual or even monthly fee for upkeep of common areas.
Repairs, upgrades, renovations. Depending on the condition of the home you buy, remember to budget for the work it will take to make it move-in ready.
Moving van rental fees and boxes.
Termination fees for current services. Carefully check your Internet and cell phone contracts.
Appliances. Whether you’ll have appliances included depends on the deal you strike with the seller. Be aware that brand-new houses usually do not include refrigerators, washers or dryers. If the other kitchen appliances are stainless steel, you’ll need to spend some serious dough to buy a matching fridge or else live with the “eclectic” look.
Utility Deposits- In many parts of the country the local utility departments require a deposit to transfer the services from the seller to you. You should make arrangements for this at least a week prior to your scheduled closing date. Candle light dinners are romantic but not if your dirty and sweaty from moving boxes.
Household items. As a renter, it’s easy to forget that the move to a bigger space means you’ll need more mundane stuff like trash cans, lamps and shower curtains. Are window coverings included? You will need light bulbs and unless it’s a brand new home, batteries for the smoke detectors. Lawn-care equipment. Buying a yard? Your new neighbors will prefer that you mow, rake and edge it.
Warm milk. Just for the first week of whigging out in the middle of the night, wondering if they still have debtors’ prison. (They don’t.)
By the way, always pack the toilet paper on top!
Thanks for giving an accurate price on home inspections in your blog. In almost every article I read, someone quotes the price of what the ‘bottom feeders’ charge.
By the way, I though the appraisal fee was always paid by the seller… have I been hosed?