Today, I’d like to cover the four common costs in buying a home.
#1: Down Payment
This is the most obvious of the four. If you are a first time home buyer, there are programs that allow you to put 0% down on your home. Otherwise, expect to pay at least 3%-5%, all the way up to 20% or more of the purchase price of your home up front. How much you put down depends on the type of home you buy, its condition, the loan you get, and your interest rate.
#2: Home Inspector Fees
While not absolutely required, I cannot emphasize enough how much it is worthwhile to get a home inspection. Expect a fee of at least $300, all the way up to $1,000 if you get very intense in your inspections (think radon, mold, meth tests, etc.). You can choose how specific you want to be, but please at least get a basic home inspection to make sure that your home has no major issues to be aware of BEFORE you buy it!
#3: Lending Fees
Expect the fees to be around 2% of the purchase price. These cover underwriting, processing, loan origination fees, etc. You have the option to pay these up front in cash or have them rolled into your loan (making your interest rate slightly higher). Depending on your situation, either could be the best option.
#4: Title Fees
This is typically .75% of the purchase price (you can round it up to 1% in your estimates to make things easier for estimates). A title policy is required by law if you have a loan. If you are paying all cash for your home, you aren’t required to pay for a title fee.
While your Realtor needs to be paid for the work that they do, when you buy a home from the MLS (Multiple Listing Service- [and almost all homes for sale on are on MLS]), the seller’s agent will pay YOUR Realtor their Realtor fees…. which means that when buying a house, you basically get a Realtor for free!