Buying A Home
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
True up-front costs of purchasing a home
I seem to remember a post that I read on this board not long ago where someone said that in addition to the downpayment, a buyer should also be prepared to spend an additional $10k for closing costs, fees, and other related expenses. I was shocked when I read that... has that been most people's experience? Or did I maybe (hopefully, lol) misunderstand? My husband and I have been saving for a downpayment, but will need to re-evaluate our saving & buying plans if we need an extra $10k over and above the downpayment amount.
TIA!
Re: True up-front costs of purchasing a home
Here are the costs associated with buying my home last year. I will also mark what I got the seller to pay. I bought a house for 115k -
$500 FHA Appraisal
$400 Inspection
$500 Earnest Money ( I think most people do at least $1,000 but it gets applied to your down payment at closing ).
$5,000 Down payment (I used a state program that gives you down payment money interest free.)
$7000 Closing Costs (this includes one year paid upfront of property taxes & insurance. I had the sellers cover all of my closing costs. FHA allows up to 6% of the loan value in closing costs to be paid by the seller if you can get them to agree to it.)
$300 Changes to the house (paint etc)
$300 movers (I think I got these cheap, yay me!)
$200 Turn on utilities (I didn't pay an deposits but if you have then it will costs more).
$100 Re-keyed the house
If I can think of anything that I missed then I will update the list.
My numbers may be a little off because I am remembering them off the top of my head. I did list these in another post so it might be my post you were referring to.
To sort of echo PP, there is a lot of other money associated with closing than just the down payment. Depending on the price of the home you are buying, closing costs can be more than the down payment. With our purchase last year of a house for $120,000 with a conventional loan 5% down, I believe the total amount of money that needed to be paid during the process (closing, appraisal, inspection, $6000 down payment) was about $14,000. We were able to get the sellers to pay $3000 towards (conventional loan only allows sellers to pay 3% towards closing).
A lot is going to depend on the price of the house and your taxes as you pay a year of taxes upfront at closing. A great book to read is Home Buying for Dummies, it really breaks down the upfront costs of purchasing a home.
Don't forget about having an emergency fund and/or a home warranty. If you're just at the point of having a down payment and don't have anything left over for any extras, you might want to re-think your purchasing schedule anyway.
When you buy a house, all those things you used to call your landlord to fix are now your problem and some of them aren't cheap and a lot of them can't be put off.
Costs can really vary and there are so many factors influencing it. We bought our first home last year and these were our costs:
Bought house for $425,000. We put 20% down
Inspection - $500
Down Payment: $85,000
Closing Costs: $2500 ( this really varies. As you can see, our house was $425k but our closing costs were relatively low)
New Furniture: $7000. We did not live on our own previously and had no furniture to take.
Also, our house was brand new so we didn't have to make any updates/changes.
I would also say we spent about $2000 on misc. items.
We went from an apartment to a house, and also had a ton of household items to buy:
Outdoors- lawn mower, weed whacker, shovel, rake, wheelbarrow, snow shovel, garbage cans
Indoor- window coverings, rugs
Misc- grill, patio furniture, vacuum, mop and broom, cleaning supplies for before you move in, basic tools, fire extinguisher
That could be the case with closing costs. I am closing on my first home in a couple of weeks and the sellers are paying all the closing fees. We had to pay the appraisal up front of about $425 and we will get that back after closing. The things we paid for were the inspection, which was about $350, and an inspection to certify our AC which was about $125.
Usually there is a septic inspection and a termite inspection, but those were already done. The septic would have cost $90 for an onsite look and about $200 to dig in and clean it. I'm not sure about the termite.
Be prepared to pay you down payment (we did 3.5% FHA) and probably $1000 for other inspections. Then closing costs, if not paid by the seller, will be about $8000.
We did a 10% downpayment. In addition to this we had to have $400 loan origination fee, $300 inspection fee, $2000 closing cost (the cheapest in our area) escrow deposit (which =3 months worth of property taxes, hoa fees, and homeowners insurance, which if I remember correctly was about $1200). Those are just the fees the bank needs, you write a check for them the day you close the loan (ie buy the house) but need proof of funds 2-6 weeks prior, depending on your bank.
We also had to show proof of funds (in addition to all of the above) bank statement showing 6 months worth of monthly payments of our new house and 3 months worth of payments of our old house (we'd gotten an offer on the old house but hadn't actually sold it yet).
and as someone mentioned, you will also need to pay anywhere from $50-150 each for gas, water, electric deposits. Plus moving expenses whether you rent a u-haul, hire movers, or buy beer and pizza for friends.
cleaning supplies to clean up the new place, and inevitable purchases (curtains, blinds, andcurtain rods were shockingly pricy, but necessary to not feel that all the neighbors could see in.