What fees should I expect when buying a home?
As the buyer in a real estate transaction, you should expect to incur the following fees:
- Earnest money deposit: The buyer will normally pay 1-3 percent of the offer price at the time of the accepted offer. The deposit will eventually become part of the down payment at the time of closing.
- Down payment: A down payment is the amount of cash paid a buyer will pay upfront to the mortgage lender for the purchase price of a home. Mortgage lenders typically require a range of 5 to 20 percent of the purchase price for the down payment.
- Private mortgage insurance (commonly referred to as PMI): PMI is a type of mortgage insurance buyers are required to pay until they own 20% of their house’s appraised value.
- Loan origination fees: The origination charges are the fees a buyer will pay to their lender for obtaining the loan. Origination fees are generally quoted between 0.5 and 1% on mortgage loans. The loan origination fees cover the:
- Underwriting fee
- Processing fee
- Application fee
- Homeowners insurance: A homeowners insurance policy is typically required by your lender and provides coverage to help protect your home and belongings.
- Home inspection: A professional home inspection is an examination of the current condition of a house. Home inspections will help buyers avoid costly mistakes and understand more about the home they’re purchasing. Home inspections typically cost $300 – $500.
In addition, there may be additional costs to consider when purchasing your new home. You may plan to hire movers, buy new furniture, or consider renovation and redecoration plans, such as repainting rooms.