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Costs to Expect When Buying a New Home
Dated: March 9 2021
Have you started dreaming about your “perfect” home? Are you ready to start looking for it, but you are wondering what it will cost you? In this post, we will break down what costs you can expect when purchasing your first, or new home.
While each transaction will vary, you can generally expect to cover the following costs:
Earnest Money Deposit: This is the money that you pay a seller when your offer is accepted. The earnest money is usually 1-3% of the purchase price. And is held by the Title Company. Once you are under contract the Earnest Money Deposit will be requested by your Realtor. If you were to back out of a sale due to a failed contingency, you can recover your earnest money in full. If the contract goes through to close, your earnest money will be applied as a credit toward your down payment or closing costs.
Option Fee: In Texas, buyers must pay an Option Fee, which is separate from the earnest money deposit. If you walk away during the Option Period the seller retains this money. If you complete the purchase the option fee is applied toward your purchase. The option fee in Texas is $100.
Home Inspection fee: A home inspection typically costs $300-$400 and is paid at the time of the inspection.
Appraisal: You can expect to spend between $300-$400 on average for your home appraisal. This fee is usually covered in your lender’s closing costs so you will not have to pay it at the time of the appraisal.
Closing Costs: Closing costs are the expenses and fees associated with the purchase and sale of a home, such as taxes, title insurance, appraisal, lender fees, and other services carried out during closing. They average around 6% of the purchase price and are paid at closing.
Home Warranty: A home warranty provides coverage for your home’s systems, such as the electrical system, heating, and cooling, plumbing, and appliances like your washer and dryer. When your appliance or system breaks down due to wear and tear (not neglect), you would call the home warranty company who would schedule an appointment with the contractor. You would only pay for the service fee, and the rest would be covered under your home warranty contract. A home warranty is approximately $500
Down Payment: This is the amount of your home price that is not being financed. You will pay any down payment at closing.
Moving Expenses: Your moving expenses vary quite a bit. Do you plan to use a moving company or enlist the help of friends or family?
When you are ready to take the next step in a home purchase, give me a call or send me an email!