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New home buyers may be aware of some of the expenses associated with buying a home (closing costs and down payment money, for example), but there are a number of costs that pop up before closing rolls around.
As a buyer, it is always best to have a small amount of money set aside to cover additional expenses. Here are some of the initial expenses you can expect to encounter along the way to homeownership:
- Earnest Money – An earnest deposit, also known as “hand money” or “good faith money,” is essentially a deposit given to the sellers, along with a signed contract. The earnest deposit may vary, and is usually determined by the sellers but, in general, you should expect to give an earnest deposit of between $500 and $1,000. Any earnest money you give to the sellers will be applied to your home loan at closing. The only time you forfeit your earnest money is if you back out of the real estate deal (provided your departure isn’t covered in the contact’s contingencies). Expect to make out the earnest money check to the title company so that it can be applied at closing.
- Home Inspection – A home inspection is, without a doubt, one of the most important things you can do to protect yourself in the home buying process. Some buyers forgo a home inspection to save a few hundred dollars, but this could end up costing them big (and I mean big) in the long run. You can expect to pay anywhere from $200 to $400 for a home inspection. Home inspections are important because, not only can they reveal large flaws in the home, but they can also provide you with the tools necessary to negotiate with the seller. A home inspection will likely be the best couple hundred dollars you’ve ever spent.
- Pest Inspection/Termite Inspection – In some areas of the country, pest and termite inspections are required by law; in other areas, they are not. Even if you are not forced to have these inspections done, they are highly recommended because, once again, you are taking important steps to protect your investment.
About Tina Fountain
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