Expect These Costs Before You Close On Your Home
There are standard costs when purchasing a home that each buyer is expected to pay prior to receiving the keys. With a little research you can realize which of these costs are optional and which are required. It’s important to know the timeline and what is expected prior to engaging in a home purchase, the following information is based on my experience in the Wisconsin home market; so I hope this article helps your search.
You Will Pay Earnest Money ($500 – ?)
This is something your realtor will certainly explain in their consultation, but it’s always good to know ahead of time what earnest money is. When you find a home, put in a offer and get it accepted; you will be expected to provide earnest money. This is a negotiable amount of money you pay to the title company (see what a title company is here) so the seller will take their home off the market while you complete your mortgage application. Some contracts negotiate smaller amounts down to $500.00, but $1,000 has become the normal amount for an average home purchase.
Remember: a larger earnest money deposit increases your chances of accepted offer, and you get that money deducted from your down payment / closing costs at close!
Be Prepared to Pay for a Home Inspection ($250-$400)
Home inspections are not required by any means, but they are a good idea. A good home inspector ranges from $250-$400 depending on the size and age of the home. You can anticipate an older home that exceeds 2,000 square feet to be on the higher side. Lower cost inspections are newer and smaller homes. If you need a recommendation for a good home inspector, here is who I recommend.
The reason a home inspection is a good idea (and worth your money) is to assess and pitfalls or defects in your potential home purchase. If the home inspector notes something that could be an issue, you can use this issue to re-negotiate your offer to a lower amount, or have these repairs completed by the seller. Please remember it doesn’t pay to pick out every issue on the home inspection report, rather the ones that are serious.
Remember: It’s important to listen to your real estate agent about the home inspection, if you are overly picky on the “little things”, it could backfire and cause the negotiations to become difficult.
Here is a quick video explaining the importance of a home inspection:
Appraisal ($450-$600)
Unlike the home inspection an appraisal is necessary. Sometimes clients get confused between these two reports (home inspection / appraisal) Always assume the home inspection is YOUR inspection, and the appraisal is the LENDERS inspection. The mortgage company will use the appraisal to determine the dollar amount the house is worth, along with any defects that could prevent them from getting their money down the road (a faulty roof that will cause significant problems, or a broken furnace)
Appraisals are paid for by you, the client, and ordered by us the broker. The appraiser will receive the order and schedule the appraisal inspection with the seller / listing agent of the home. Once the order is complete we will receive a copy and send it to you. If you have questions about the appraisal you can read this article : what to happens with a low appraisal or this article : what to expect with your home appraisal.
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Justin Scott
Loan Officer
NMLS 878581
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Executive Mortgage
NMLS 271650
909 . E Walnut Street
Green Bay WI 54301