Friday’s Five – Let’s talk Buyer Cash

There is not much more in life that can be as exciting or scary at the same time as having your first child or buying your first home.  However, we quickly learn that both these firsts come with some unexpected expenses.

When buying a home, you need to consider more than just how much home you can afford and your monthly mortgage payment.  You will need to have cash on hand for the out-of-pocket expenses, in other words the cash up front.  Below are the top 5 expenses associated with buying a new home:

1. Down Payment: This is typically the biggest out-of-pocket expense. In North Carolina, the down payment can vary, but it’s often around 3% to 20% of the home’s purchase price. The more you put down upfront, the lower your mortgage payments.
2. Earnest Money/Due Diligence Fee: These fees are included in the Offer to Purchase Contract. The due diligence fee is non-refundable compensation paid to the Seller for taking the house off the market; earnest money is meant to prove that you are serious about moving forward.  Don’t worry, both fees are deducted from your offer price when it comes to financing.
3. Closing Costs: These include various fees associated with the home purchase, such as attorney fees, title insurance, and recording fees. You can plan for closing costs can range from 2% to 5% of the home’s purchase price.
4. Appraisal Fee: This is required to make sure you are getting what you pay for. The appraisal is required and handled by your Lender.  Most lenders will require for the buyer(s) to pay for the appraisal upfront before the evaluation is done.
5. Home Inspection Fee: This one is like taking your home to the doctor for a check-up. Expect to pay for a thorough inspection to ensure your new love nest is in tip-top shape from the roof down to the footings.

So, when you get a little overwhelmed at the prospect of buying a house or starting a family, remember a house becomes a home when raise your children and make new memories.