When you decide to buy a house, there are a lot of things that go into this huge investment. You spend a lot of time scrimping and saving as well as looking for the perfect agent, neighborhood, and a house that fits your family’s needs. Now that you have your dream home, what else will you need to do? Pay. Buying a house from the residential sales market has a lot of costs most buyers do not think about or anticipate. So where is your money going? Let’s take a look at several hidden costs.
Earnest Money Deposit
An “earnest money deposit” is submitted with your offer on the residential property. It is quite common and should be expected in residential sales. It is normally one to three percent of the offer price. For a moderately priced home of $150,000, your earnest deposit would be between $1,500-4,500. Once the offer is accepted, this amount is applied to your down payment that can be between 3.5 and 20 percent of the purchase price.
Home Inspections Costs
Many people assume inspections are paid for by the current owner of the home, but that isn’t true. Before closing on your dream house, your lender may require you to get an inspection of the property. Beside it being required, inspections are a useful tool that should be used regardless of being required. They will alert you to any potential or current problems with the residential property and can help you decide if the house is worth the work it will take to live there. A few hundred dollars for an inspection could help you avoid spending thousands on work that needs to be done.
There will be a lot of lender fees that you may forget about when paying them, but the term “closing costs” generally covers the expansive amount of lender fees. These are fees your lender will charge in order to recoup their costs. These fees will include credit report fees, processing and application fees, and underwriting fees. Many of these fees are accrued before even approving the buyer’s application. The underwriting fee is to cover the costs of investigating the applicant before approving their application while the application and processing fee is charged to reimburse the company for processing your information.
While it is best to set aside $3,000-5,000 for closing costs in addition to your down payment, these fees vary by lender and area. For more information on the costs of closing on your new house, ask your Clagett Enterprises agent how much you can expect to pay at the closing table.
Buying a Residential Property with Clagett Enterprises
At Clagett Enterprises, we have extensive experience serving the greater Frederick area and Western Maryland, since 1987. Our team is a full service real estate company that’s ready to help you with your real estate needs. Speak with a Clagett professional at 301-665-6009, or request a proposal for preventive maintenance here.