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At age 27, I am in the process of buying my FIFTH house. I feel slightly insane moving again after just recently purchasing a new home earlier this year, but when your dream house down the street hits the market, you jump.
Despite having bought 4 houses in the past 7 years, I still forget the up-front hidden costs involved. Most people know they have to save for a down payment, but surprise, there are many other things you have to pay for before you even get to closing!
#1 Earnest Money
When you put an offer in on a house and it is accepted, you have a certain period of time to send over earnest money. This is typically 1% of the purchase price to prove your serious interest for the property. Earnest money eventually gets applied to your total costs, but you have to be prepared to pay it up-front.
Once your offer is accepted, you will likely pay for an inspection. There is your typical home inspection plus speciality services such as a sewer scope and/or radon testing. These are often individual costs and depending on your area, it may be smart to pay for all three. I want to say we paid around $800.00 for radon, sewer and the general home inspection. This will likely fluctuate depending on your area.
Another up-front cost that I completely forgot about was the appraisal. We recently paid around $450.00 to have our new house appraised, which is a must if you are securing a loan to purchase your home.
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It’s fairly common knowledge that you need a down payment to buy a house, but these up-front costs are often overlooked and may be a surprise when you put an offer in on your first home.
Other additional costs besides the down payment include closing costs such as a loan origination fee, property taxes, and title fees. Plus, don’t forget to account for the commission paid to your real estate agent.
I hope this insight will help make your home buying experience smooth as butter! Have questions for me? Leave a comment or send me a DM on Instagram.