It’s important to understand the costs associated with buying a home. Earnest money, loan applications fees, home inspections, and closing fees are all costs associated with purchasing a new home.
When an offer is written, it is accompanied by an earnest money deposit. The earnest money, in the form of a check, is evidence of the buyers intention to carry out the terms of the contract in good faith. The check is given to the listing broker, who holds the check in an escrow account. The amount of the deposit is usually between 1-3% of the purchase price. However, new construction sometimes requires a larger percent.
As a rule, the deposit should be an amount sufficient to:
- Discourage the buyer from defaulting
- Compensate the seller for taking the property off the market
- Cover any expenses the seller might incur if the buyer defaults
Loan Application Fees
The loan application process takes place anytime before selecting a home, but no later than five to seven days after the seller and buyer agree. Fees are paid to the lender for credit reports and appraisals. Expect a credit report to average $55 and an appraisal fee from $450-$500.
Inspections take place within 5-10 business days of the acceptance of the purchase agreement. A home inspection and radon test will be completed. Home inspections average $450. Radon tests are approximately $150 and take two days to measure the results.
The agent fee for the buyer is paid by the seller. This fee is included in the listing agreement between the listing agent and the seller. You get our advice and a dedicated agent with no sales commission at cost to you.
At closing the balance of your down payment plus closing costs will be due. Closing costs are typically 3% of your loan amount.