What Are the Additional Costs of Buying a Home?
Kelly Allen
After attending Georgia College and State University, Kelly Allen decided it was time to pursue a new challenge: the wild world of residential Real Es...
After attending Georgia College and State University, Kelly Allen decided it was time to pursue a new challenge: the wild world of residential Real Es...
Outside of the purchase price, here’s what it’ll cost you to buy a home.
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How much does it actually cost to buy a home?
There are several fees you’ll have to pay outside of the purchase price—the first few within the first two weeks of the transaction.
The first of these is the earnest money deposit, which usually accounts for about 1% of the purchase price. For example, if you were buying a $400,000 home, your earnest money deposit would be $4,000. This fee is held in an escrow account until closing when you get it back. Next, you’ll have to pay the home inspection fee, which can range from $450 to $1,200, depending on which inspections you choose. The final fee you pay during this time is the appraisal fee, which usually costs between $400 and $500.
After that, it’s time to pay the closing fees. Depending on the market you’re in and the seller’s situation, you can negotiate for them to pay all or some of the closing costs. You also might have to pay all of them yourself. In any case, the primary fees paid at this time are the attorney and lender fees. Your attorney fee will cost about $700.
When it comes to lender fees, you’ll pay the expenses intended to set up your escrow account—homeowners insurance and taxes. Your lender divides this total by the 12 months of the year and then multiplies it by however many months you’re required to hold this payment in escrow. They want to make sure you’ll pay these two bills, so they’ll collect the first three to six months’ worth up front. Additionally, you’ll pay your first year’s worth of homeowners insurance at closing or beforehand.
There are other miscellaneous fees to account for as well, including the flood certification fee, title exam and insurance fee, government recording fee, credit report fee, recording fees, and intangibles tax (which equates to $3 for every $1,000 in the state of Georgia, or $1,200 total in this example).
When you add up all these costs, your total for a $400,000 home amounts to about $13,000. If you subtract your $4,000 escrow fee after closing, the total is reduced to $9,000.
If you have any other real estate questions I can answer, give me a call or send me an email. I’d love to hear from you.