Upfront Costs as a Home Buyer
Most buyers are aware of some of the fees that are paid during the purchase of a home such as title and escrow fees, but there are some smaller fees that are sometimes overlooked. Here are some of the lesser-known or overlooked fees that buyers should budget for that will be paid upfront during the transaction.
Application Fee: $75 – $300
The loan application fee is usually a one time upfront fee that is nonrefundable usually charged when a borrower submits a loan application. Loan application fees vary based on the lender used and some may not even charge an application fee.
Home Inspection: $300 – $500
The home inspection is an important inspection that will give you as the buyer a magnified look into the condition of the property as it sits currently. Prices will vary based on the square footage of the house and if there are additional dwellings on the property. This is something that will be paid upfront by the buyer and the home inspector will generate a detailed report that you and your agent can review. This report will help note any material defects that need to addressed immediately that can be negotiated for repair.
Pest Inspection: $100 – $280
A pest inspection is another important inspection that buyers should get. The pest inspector will go through the house top to bottom in search of conditions conducive to wood destroying organisms and fungus. This is another inspection that is paid upfront by the buyer and the pest inspector will generate a detailed report of the conditions of the property relative to wood destroying organisms and environments that would support their growth. This inspection will also provide an estimate to how much it would cost to make the repairs and can be used to negotiate repairs on the property.
Appraisal Fee: $200 – $475
The appraisal fee is another upfront cost to the buyer, but is extremely important in helping to determine if the buyer is making a sound investment in the property. The appraiser will inspect the property thoroughly as well as check comparable properties to make sure that the price the buyer is going to pay for the property matches how much the property is actually worth. This is a beneficial report and can be used to negotiate if the buyer is paying more than the house is worth as well as it can serve as a reason to back out of the transaction if the seller is not willing to negotiate if the house appraised for less than the purchase price. Pricing will vary based on how large the property is and if there are any additional dwellings on the premises.
Title Services: $150 – $400
The title service fees are part of the closing costs that a buyer pays when obtaining a mortgage. The buyer will receive a document called the deed upon purchasing a home and it will show a transfer in ownership from the sellers to the buyers. This is known as the “title” of the home. The title service fees are costs that are associated with issuing a title insurance policy.
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