When I talk to anyone who’s ready to buy, one of the main topics is how much cash will it take to close on their home’s purchase. Here’s a breakdown of the costs that are incurred when buying a home and when those costs are due:
- Inspections: When purchasing a home, it’s important to hire professionals to inspect the property before you close on it to ensure your new home and safe and functions correctly. The cost of a home inspection ranges depending on its size, but typically you are looking at a range from $300-$450 for a full home inspection. This is typically due once the inspection is complete and before you close on your new home.
- Down Payment: Your down payment is money you are putting down up front on the principal of your home loan. The amount is based on a percentage of the purchase price and the required percentage differs depending on the loan type. These amounts range from 0%-20% of the purchase price. It’s important to consult with your lender to determine what loan works best for you and what percentage you are required to put down. For example, if you’re buying a home that’s $300,000.00 and putting 5% down, you would need $15,000.00 for a down payment. This money is due at closing as part of your “cash to close” amount.
- Closing Costs: Closing costs are fees charged by the lender and the title company. These fees change slightly depending on the price of the home, but to get you close, I normally see a total for closing costs being anywhere between $4,000.00-$5,000.00. This money is due at closing as part of your “cash to close” amount. Closing costs, however, is a fee that I can negotiate on your behalf to get the sellers to pay a part or even all of.
For example) Let’s say a buyer is using a conventional loan to purchase a home that is $200,000.00. The loan requires they put 5% down. To help this buyer have an idea of how much cash they will need to close on the home, I would estimate they’ll need a total of around $15,000.00 to cover inspections, down payment and closing costs. If this was an issue, we could negotiate the offer and ask sellers to pay for the buyer’s closing costs which would lessen the amount needed to around $10,000.00.
Have more questions about buying a home? Would you like a more specific examples tailored to you and your situation? Use the contact button to reach me directly!
