Understanding the Up-Front Costs of Buying a Home with Modern Traditions Realty Group
When embarking on the exciting journey of purchasing a home, it's crucial to be aware of the various up-front costs involved, in addition to the price of the house itself. At Modern Traditions Realty Group, we believe in transparency and empowering our clients with all the necessary information to make informed decisions. Here's a breakdown of the typical expenses you can expect before and at closing:
Earnest Money: Securing Your Intent
When you make an offer to purchase a home, it's standard practice to submit earnest money. This is typically around 1% of the contract price and acts as a sign of good faith, showing your serious intention to buy.
Inspections: Ensuring Quality and Safety
Conducting inspections is a critical step in the home buying process. These inspections, also known as due diligence, vary in cost depending on the size of the house, usually ranging from $375 to $500. Additional charges may apply for specialized inspections like Radon, termite, and stucco.
Loan Application Fee: A Cost That Can Vary
The loan application fee can differ based on the lender you choose. It's worth noting that our partner at Brand Mortgage does not charge an application fee, which can be a cost-saving advantage.
Appraisal: Determining the Home's Value
The appraisal fee, collected by the lender, is an estimated average of $425 to $450. This fee is for the appraisal of the home to determine its market value, an essential step in the mortgage process.
Survey: Knowing Your Boundaries
While optional, a survey is advisable as it clearly identifies the property boundaries. The cost typically falls between $400 and $500, varying with the size of the lot.
Down Payment: A Significant Closing Expense
The down payment, which varies depending on the type of loan (such as FHA, Conventional, etc.), is due at the time of closing. This is usually a significant portion of the home's total cost.
Pre-Paid Items: Covering the Essentials
At closing, you'll also need to cover pre-paid items. These include taxes, insurance, per diem interest, and homeowners association (HOA) fees. These are prorated based on your closing date.
Closing Costs: The Final Step
Finally, closing costs are paid at the time of closing. These costs depend on the type of financing and the size of the loan, typically ranging between 2-3% of the sales price. There may be additional costs required to be paid upfront in certain circumstances.
It's important to remember that these costs can vary depending on the lender and home inspector you choose. The ranges provided here are meant to give you a general idea of what to expect. At Modern Traditions Realty Group, we're committed to guiding you through these financial aspects with clarity and support, making your home-buying journey as smooth and understandable as possible.