When buying a home, many buyers think they only need to have a down payment ready for closing, however, there are many other fees that have to be paid throughout the process. So what are these other costs, when are they due, and how can you prepare for them? Look for a separate post touching on inspections for vacant land.
Appraisal: Typically the appraisal is around $450 to $550+ and is paid to the lender at closing, but some lenders do collect that payment upfront. A few questions you might have: What happens if the home doesn’t close? You will most likely still have to pay for the appraisal if it was completed. Do I have to pay for the appraisal if it comes in less than the purchase price? Yes. No matter what the value is, if the work has been done the appraiser will be due their fee.
Home Inspection: I always recommend buyers do a home inspection on a property. These may range from $350 to upwards of $750 based on the size of the property. If you tell the inspector the size of the home, they should be able to give you a quote over the phone. The inspector will collect the fee for the inspection at the time of inspection.
Additional Inspections: I often recommend clients do additional inspections on top of the general inspection. It depends on the property you are purchasing if and which of these I would recommend. Typically these inspections are done on the same day as the general inspection and are paid for that day:
Radon – Radon is a naturally occurring gas which could pose a health hazard if the levels are at or above 4 pCi/L according to the EPA. This is a very common test in our area. Your inspector will run this test for 48+ hours and then will check the machine’s readings to determine if the levels are safe. The cost for this is $100- $250.
Wood Destroying Insects/Termites – Checking for signs of insects that could cause major damage to your home is very common. This includes: termites, carpenter bees, carpenter ants and powder post beetles. Prices range from $75-$150 depending on the size of the home.
Septic – If you are buying a home with a septic system you can have the local health department perform a visual inspection for $100 (plan ahead as this will take several weeks) or you can hire a septic company to pump then inspect. I will ask for info from the current owners on the septic maintenance. Start with your home inspector and see if they will conduct a dye test that might cost @$75. Then go from there depending on the findings, etc…
Sewer scope – Usually done on inspection day if there is access to the sewer. The costs could be $150 – $500 (may depend on where, how much length, amt of time it takes and/or if there is a clog that needs cleared first). This will help determine if the lines are clear or not. Especially good to do if there are large trees on a small property – think Elm Heights area, smaller lots and huge trees with major root systems.
Pool, Water, Indoor Air Quality, & Mold – These are some additional add-on tests. These are not as common. If you have well water though, you will want to have the water tested.
Closing Costs: When you close on your home or land you will then pay closing costs and prepaids on top of your down payment. Closing costs are typically 2% to 3% of the purchase price and likely include the appraisal as well as title co fees, lender fees and more. You’ll also likely need to pre-pay 6-12 months of your homeowners insurance or HOA fees. Your lender is going to be your best resource for those fees and will explain what you will need to bring to closing in terms of cash that you wire. If you are paying cash, the cost to close at a title company is going to be around $550 and then you may need to pay pre-paids. You won’t have loan closing fees or an appraisal fee due at closing. Remember, your earnest money is credited back to you at closing and most buyers get a credit from the sellers for future taxes, so those often offset a chunk of these costs.
If you have any questions about how much money you need to have to buy a property, please let us or your lender know!