Out of pocket Expenses While Buying a Home


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Hey all. This is Jason Williford with Real Estate Expert Advisors. I just wanted to educate homebuyers of out-of-pocket expenses to expect while buying a home. The five macro boxes that I'll go into a little bit of detail, the number one as obviously that most homebuyers know they're going to need is their down payment. Obviously your down payments can change depending on which loan that you're going with, an HFA loans going to be 3.5% conventional usually starting out 5% for a conventional loan but there's actually programs available that may be available to you right now at a conventional rate of 3%.

There's also down payment assistance programs available as was well at 0%. First thing out-of-pocket expenses that you're going to have buying a home is obviously the down payment. The number two experience that homebuyers want to have is going to be closing cost. A good typical rate on closing costs usually ranges approximately 3% of what a home's loan amount is going to be, which that can vary as well. You'll definitely want to check with your loan officer prior to positioning an offer in the marketplace to see about an exact amount of closing costs is going to be needed. That usually includes your prepaid taxes, prepaid interest which we macro into your prepays.

Number three is home inspection. We're always going to recommend that you have a home inspection on a home. When you're looking at square footage homes up to approximately 3,000 4,000 square feet, usually going to have approximate cost of $400 to $600 for a home inspection. There are add-ons in the home inspection and some we do I highly recommend like a raid on test. There's lot of homes in metro, Atlanta that have raid on. We like to suggest that a homebuyer passed that prior to buying a home that could potentially have raid on. Another cost would be earnest money. A good approximate amount for earnest money is 1% of the sales price.

A $300,000 home, you can be looking forward to putting $3b000 down earnest money. Now, earnest money, a good way to look at that would be like a deposit, you're getting that money back at closing but it's basically giving the sellers, letting the seller know, "Hey Mr. and Mrs. Seller, we're in good faith we are going to be moving forward in this transaction. Here's your earnest money." That is a negotiable amount with earnest money. Many times we can get that amount lowered but sometimes it could also be higher as part of one of the strategies in the multiple offer strategies that we have.

Last but not least would be appraisal cost that's included. If you are a finance buyer, all lenders are going to want to have an appraisal done on a home. A good approximate amount for an appraisal was going to run $450 to $600 for an appraisal, good average amount be around $550. Of course giving up into luxury homes, getting higher priced homes, bigger square footage. Of course, that is a viable amount that can go up, same thing with a home inspection as well. Which I guess is the same as with all of these bigger home, bigger price point, those numbers can variate.

If you do have any questions about the out-of-pocket expenses that goes along with buying a home, we would love to help you out with that.
Even if you're not looking to buy a home right now, even if you are getting ready to buy a home and you're looking to save up money and you may be a year or you may be two years out, we'll be glad to hop on the phone, hop on text or by email, either way that you like to communicate and I'll help you out with any kind of questions that you may have. Have a wonderful day.
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