What Does It Really Cost to Buy a Home?
How much does buying a home really cost? I’ll go over all of the out-of-pocket expenses that you can expect during the transaction.
Whether you're buying in the city of Piscataway or Edison, before you actually become the homeowner, there are several out-of-pocket expenses that you will have to pay.
First of all, when you make the offer, you have to send in an earnest deposit, also known as a good faith deposit. The earnest deposit goes toward your down payment and shows the seller that you are serious about buying the home.
If you are getting a mortgage to finance the purchase of the home, you will have to pay to get the home appraised. The bank wants to know that they are getting a fair price and paying market value for the home. They want to make sure that you will be able to sell the home and pay them back the money that they loaned you to purchase the home in the first place.
Once you are under contract, which usually happens seven to 10 days into the transaction, you will make a second deposit. This, combined with your earnest money, will eventually make up your entire down payment.
At closing, you have to secure homeowner’s insurance and run title work on the home. You want to make sure that the title does not have any liens on it so that when the time comes, you can resell the home without any issues. You should also purchase title insurance.
If you are using an attorney, which we definitely recommend, you will have to pay the attorney fees for closing out that transaction. Otherwise, there will be other miscellaneous costs due at closing, like property taxes, sewer inspection costs, or HOA dues.
Ultimately, closing costs make up 3% to 4% of the purchase price. At closing, you will also pay the final installment of your down payment.
So, even if you are financing your home purchase, there are a few costs that you will have to cover before you can close on the home. If you have any other questions about these costs or about real estate in general, give me a call or send me an email. I would be happy to help you!