February 25, 2023 • 16 mins
In this episode, we will explore the often-hidden costs and fees associated with purchasing a home that most buyers don’t consider. From home inspections and closing costs to moving expenses and mortgage fees, there are many hidden charges tucked away in the home buying process that must be accounted for when budgeting.
We will talk to real estate experts and industry professionals to get an inside look at what these costs might look like in today’s market, as well as discuss how buyers can plan ahead to make sure their budget is realistic when making one of life’s biggest investments.
So join us on this journey into the world of home buying and arm yourself with the facts before taking that leap!
See the entire article at: https://fthbpros.com/the-hidden-costs-and-fees-of-buying-a-home/
Find all our episodes, articles, newsletter, and resources on our main site: https://FTHBPros.com
Looking for a local real estate agent outside of California? We’ve partnered with Home & Money, simply go to https://homeandmoney.com/FTHB/ and we’ll help connect you with a local, vetted agent.
Contact Information:
Philip Mastroianni – Loan Officer & Real Estate Agent
(949) 357-5029
Phil@HomeLoansPM.com
NMLS# 2141541
DRE# 02141890
Monica Mastroianni – Real Estate Agent
(951) 395-1848
Monica@HomesMM.com
DRE# 02099257
Legacy Homes Realty
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Phil (00:00):
Welcome to the first Time Home Buyers podcast.
Today I wanna talk aboutwhen buying a home, how
much will it actually cost?
There's more than just thedown payment to think about
think.
We've got Monicaagain with us today.
(00:20):
She's a real estate agentwho's gonna give us an
idea of what kinds ofexpenses you can expect.
When purchasing a home, I wantedto just go from the beginning
of the process through the end.
What is the first thing,Monica, that a home
buyer will need to pay?
Monica (00:35):
Hi.
Nice to be here again.
So thanks for having me.
so again, the first thingregarding finances that is
truly the most importantaspect for home buyers is to
speak with a lender right offthe bat, even if you're not
thinking of purchasing a homefor another six to 12 months,
it's extremely beneficial.
Speaking with a lender earlyon is so that they can help
you with any credit issuesor finance concerns, or
(00:56):
just simply start you onthe process to which loan
type will be best for you.
Lenders are such a fantastictool for you as home buyers
because they let you knowhow much you truly have
to have saved or willneed for this process.
And they're also there toanswer any and all questions
you have about this process.
So when you are trulyready to purchase a
home, you'll be prepared.
Phil (01:16):
Yeah, and feel free to reach out to me anytime.
I can.
Look at your finances and letyou know pretty easily if you
have enough money saved up orabout how much you might need
if you're having credit issues.
We do have a soft pulse, soit doesn't affect your credit.
and a great partnership with acredit consulting group that was
actually on our last episode.
They can help get youwhere you need to be
(01:38):
for purchasing a home.
And our listeners get a freeinitial consultation just
by mentioning the podcast.
Monica (01:43):
So moving forward to the subject of costs
that you'll actually needwhen purchasing a home.
I'm gonna kind of start withthe process from the beginning.
Let me first start off by seeingthat one of the most asked
questions I get right awayfrom buyers is, how much do I
have to pay you as a realtorto represent me to buy a home?
The seller of the home isusually the one that pays
the cost of the realtors.
(02:05):
The seller will pay a commissionto the listing agent who is the
one that is selling the house.
They then in turn, givea part of that commission
to the buyer's agent whowould be representing you.
That commission is pulled fromthe profits of the home, so it's
already built into the pricing.
Even though you aren't directlypaying your agent to represent
you when you buy a home.
What you aren't paying mefor are any kinds of hourly.
(02:28):
Gas mileage, , thosekinds of things.
They're all just buyers agentcosts of doing business.
So that's why it's reallyimportant to find an agent
that you really like and thatwill work hard for you and
really communicate with youabout the entire process.
Once we have found your homethat you have love and you
have had your offer acceptedon it, you will typically
have earnest money due.
Now, earnest money is adeposit made to the escrow
(02:50):
account that represents abuyer's good faith to the home.
This money is due within thefirst three days of opening
escrow and will be done througha wire transfer at the bank.
Not wiring these fundsover or delaying this could
possibly mean losing thathome because it's part
of that normal contract.
the amount of the earnestmoney is gonna vary, and it
can range from about one to3% of the purchase price.
(03:11):
Some of the sellers mightask for a higher amount to
be deposited because it showsthem that you have more skin
in the game, but I, as anagent, try to keep it at
1% of the purchase price.
So for example, on a $500,000home, it's gonna be anywhere
from 5,000 to $15,000.
Again, going at the 1%.
Where I going at it wouldbe closer to the 5,000 mark.
The more you put in theearnest money, the stronger
(03:33):
your offer is to the sellers.
Just be aware that you wannamake sure that your money
is protected by your offer.
This is something that yourrealtor should definitely.
Talk to you aboutfurther in depth.
Now, should something happenduring escrow that was not
the fault of the sellers,the sellers may be entitled
to keep this earnest money.
So for instance, you can'tback out of an escrow on a
house because a better housecame on the market towards
(03:55):
the end of this escrow.
Now that earnest money thatbeginning of the escrow
is not just lost money.
So don't be afraid for thatat the end of the escrow.
It's usually appliedtowards your closing costs
or your down payment.
Even still on a no down paymentloan, I highly recommend
doing a minimum of $1 to upto a thousand dollars just
to, so that you are serious.
(04:16):
Again, make sure you speak withyour lender and your realtor
about the earnest money becauseevery home will be different.
Phil (04:21):
so now you've got your earnest money.
What else will youneed to pay for?
Monica (04:27):
this is what I like to call phase three
of buying your home.
This is when you're gonna begetting into the inspection
in the investigation period.
Your sales contract willspecify how much time you
have to review the home, haveinspections done, and ultimately
decide if you are going tomove forward or terminate
the contract based on those.
Phil (04:43):
Okay.
Can you give us an ideaof the inspections and
maybe how much are theircosts associated with them?
Monica (04:48):
Of course, so there's gonna be a
general inspection done.
We did an episodeon this already on
episode 11, I believe.
So definitely listen tothat one to get more details
on what that involves.
No matter if you are a renterliving in the home, you're about
to purchase or this is a newhome for you, I recommend fully
getting a home inspection done.
I like to set this up usuallywithin the first week of opening
(05:09):
escrow because the sooneryou know about something, the
sooner we can get it fixed.
This, is gonna show you whatpotential problems there
could be with the home.
The inspector is gonnago over the entire house.
He's gonna look inside and out.
They will test as muchas they can that can
be tested in the home.
, they'll put together avery in-depth report of
findings, both good and bad.
And the cost is usuallyaround 275 to $400.
(05:32):
And it really just dependson the size of the home.
the cost of this is dueat the time of service
from you as the buyer.
And most inspections takecash check, credit card,
debit card, and everyinspector is different.
So remember that.
Do some comparing or ask yourrealtor for some recommendations
for an inspector.
Now, if you have thingslike a pool, a septic tank,
(05:53):
older roof, air conditioningissues, electrical issues,
or even foundation issues,then you'll want to bring
in an additional specialist.
Pool inspections can beupwards of $400 depending
on the amount of equipmentyou have in the home.
But sometimes things likeroof inspections can be a
no charge inspection froma roofing company who will
come out and let you knowwhat work needs to be done.
(06:15):
How I help my clients is Igo over the home inspection
report with you as the buyer,page by page, and if there
is something that needs tobe inspected, additionally,
I'll call in, , and setup other inspections for.
Again, any inspections youget done is on your cost and
is to be paid at the time ofinspection, not through escrow.
You are welcome to have as manyinspections done as needed,
(06:35):
and as long as it's in yourinspection period, you're fine.
Phil (06:38):
Also, we never advise anyone to skip an inspection.
And if you have specializedequipment or older features
to the home, or it's just anolder home in general, you'll
be spending more on that.
Monica (06:49):
you should also consider getting a
termite inspection done.
This could cost around 150to $200 for the inspection.
many loan programs require atermite report and sometimes
this may be something thatthe seller pays for as well.
it's gonna depend on howyour realtor writes up
that contract for you.
Should there be any termitedamage that's gonna be a
separate cost to fix andrepair the structures of
(07:09):
the home that were damaged.
, so depending on how thecontract was written up, either
you or the homeowner will beresponsible for paying for that.
Another thing I didn't mention,there are cases where a seller
will pay for some items.
For example, the terminatedinspection or the home warranty.
The home warranty will be ayear of coverage on the home.
Should anything happen tothe AC or hot water heater,
(07:30):
usually it's around $700, but itdepends on the size of the home.
and if you have a pool or not.
Now, I don't ever suggesthaving a seller pay for
inspections aside from thetermite report because it
could become a conflict ofinterest, in my opinion.
So again, it's all based onwhat you and your realtor have
discussed and how your realtorwrites up your contract.
Phil (07:50):
right?
So inspections are gonna costyou, $300 or more depending
on the home size and features.
And then there's another costthat isn't an inspection,
but usually happens inthe same time period.
And that's an appraisal, ahome appraisal is done to
determine the value of the home.
Most loan programs will requirethis prior to funding a loan.
(08:11):
Lenders don't want to approvea home loan if the home isn't
worth what you're paying for it.
Appraisals are going to runaround $600, but that can
vary by appraisal company,and if you're trying to get
it done in a rush, thereare extra charges that can
be a few hundred dollars.
Sometimes.
This again, will be paid byyou as the buyer and will
(08:33):
usually be done in the firstweek right after escrow
opens that we can go aheadand get that appraisal done
right away at the beginning.
We usually do this througha credit card payment.
Your lender is gonna goahead and send you an
email with a link and yougo ahead and pay for it.
So we've gone through the home,we've done our inspection.
, we've removed thatcontingency, right?
Monica (08:54):
Right.
So removing the contingencymeans that as a buyer,
you weren't able to backout of the contract for
that specific reason.
and we have specific timeframesto protect you, which usually
is about 17 days afteracceptance of your offer to
get those inspections done andaccept that you are okay to
move forward in the process.
Again, this all determines onhow your realtor has written
(09:15):
up the contract however, thatcontingency period also protects
you as buyers as well, becauseshould you find something
major wrong with the home thatperhaps the sellers are not
willing to fix or credit youa dollar amount towards fixing
it, then you can safely backout of that contract and still
get your earnest money back.
You'll only be out thecost of the inspections
and the appraisal.
So as long as everything comesback fine with the appraisal,
(09:37):
we're really in a good spot tomove forward with the purchase.
The next things thatwe'll be looking.
Are paying for the closingcosts and the down payments.
Phil (09:46):
Your down payment will range anywhere from
3% to 20% on average, andthat money will need to be
available to wire before yousign your final paperwork.
So, Make sure that you have thatin your account and available
for things like FHA loans,that's three and a half percent.
If you're doing a VA loan or aU S D A loan, that might be 0%.
(10:07):
So it all depends on thatloan type that you've got.
Now the next thing is closingcosts, and those are fees and
expenses that you're gonnaincur for purchasing a home.
Those are gonna be thingslike your loan origination
fees, appraisal fees,title, search and insurance,
maybe survey fees, escrowsclosing fees, notary
fees, document preparationfees, and recording fees.
(10:31):
The total amount that you payin closing costs varies a lot
depending on your location, yourcounty, even the day that you
close, but typically it's gonna.
From about 1% to 3% ofyour purchase price.
So again, On that $500,000example home, this will
range anywhere from $5,000to $15,000 on top of any
(10:53):
other fees you're paying.
Your loan officer will giveyou documentation that shows
you which of these feesyou can actually shop for.
A notary fee, for example,could be one area that
you could save money on.
, while the appraisal fee isn'tsomething that you can negotiate
or shop around and find a lowerrate, so definitely talk to
your loan officer about the loanestimate and the fees on there.
(11:13):
If you're trying to reduce theamount of your closing costs,
Monica (11:16):
amount, there's usually not too much that you can reduce
there, but every dollar mattersand just knowing what you as
the buyer are really payingfor is truly what matters.
Phil, is there a timelineon when they pay their down
payment versus when theypay their closing costs?
Phil (11:29):
Typically, you're gonna have to wire your closing costs
and your down payment into theescrow account before, usually
a day or two before the actualsigning takes place right before
you close and get your keys.
let's say you've closedescrow, you've got your keys.
What kind of home expensescan I now expect after moving?
Monica (11:50):
Well, you have to get your utilities
on and into your name.
That's the most important one.
Some of those may requirea deposit, so definitely
budget for that.
Some homes may be vacant andrequire more time ahead to
get the utilities turned on.
So I always recommend thatyou get the gas, water,
and electricity turned overinto your name as soon as.
Now the big thing is probablygonna be your moving costs.
(12:11):
If you are just moving acrosstown, your average price to
move a three bedroom houseis around $480 to about $800.
Cross country, you're gonnarun at least 2000 to $5,000
plus 50 cents a pound.
An average three bedroom homehas 5,000 pounds worth of.
So you could be spendingupwards of 5,000 to $15,000
(12:33):
to move from one home toanother cross country,
depending on how far and howmuch you're transporting.
And also the companythat you use.
Each company is different.
So definitely shop around.
Phil (12:43):
And then what other costs are there to consider?
Monica (12:45):
don't forget your furniture.
If you're moving into alarger home, especially from
an apartment, you may needto get some extra furniture
for the larger spaces andbefore you move everything
in, it's the perfect timeto paint or update flooring
if you need to or want to.
It's also a goodtime to make repairs.
To the home while nobody is inthere, especially repairs like
plumbing, which usually requireturning off the water to a home.
(13:07):
, last thing, you might alsoneed or want to get the
carpets cleaned or replacedand consider any necessary
landscaping costs, all ofthese costs and add up quickly.
So just make sure you do yourresearch on different companies
and budget for that as well.
Phil (13:19):
I think these are all really great things and
really encompass a lot whatyou're going to be paying
that maybe isn't as obvious,they're almost the hidden
costs of buying a home.
They're not part ofthe down payment.
They're not partof closing costs.
Now, any last thingsthat you wanted to
impart on our listeners?
Monica (13:35):
Yes.
I just wanted to stress onelast thing about finances
and the, the process.
Once you're in escrow, it isextremely important that you
do not apply for a creditcard like a Home Depot card
or a Kohl's card to save 20%.
don't go buy new furnitureand open a credit card.
Please absolutely donot buy a vehicle.
No new vehicles are allowedduring the escrow period.
(13:58):
It's really funny that I haveto say that, but those kinds
of things could put your debtto income ratio higher than
what the loan approves you for.
So please, please do notbuy unnecessary items until
after you close escrow.
If you wanna buy all the cars onthe lot or open 50 credit cards.
Day, that's totally fine, butdon't ruin your chance of losing
the home and possibly all thatmoney that you've invested into
it by doing something too soon.
(14:20):
we as realtors and lendersknow that life happens and
all that, but if somethingfinancially does come up, speak
to your lender immediately.
That's why it's so importantto have a lender that you trust
on your side that you can speakwith anytime so that he or she
can advise you on if somethingcould potentially cause you
your loan to not go through.
I tell my clients those 30days of escrow is a time for
(14:41):
you not to touch your money.
It's so important because oneminor thing to you could be a
huge thing to the underwritingteam or the lending team.
It's not worth it.
Don't risk it.
Again, we are based out ofCalifornia and it may be
different in your area, but thebest thing to do is always check
with your realtor or your lenderabout financial matters and any
numbers we have given you today.
Phil (15:02):
Yeah.
And again, thank you somuch for all of your wisdom
that you've given us here.
I think the listeners here,especially if you're a
first time home buyer, maynot know what's all the
different costs associated.
But again, please head overto fthbpros.com, our website,
where we have all of our podcastepisodes available, articles
(15:22):
and newsletter and resources,along with our Facebook group
where lenders and agents canhelp answer your question.
and you can also getMonica's information.
You can reach her directlyover the phone, (951) 395-1848
or Monica@HomesMM.com.
I'll include that in theshow notes and you could
also get it from our website.
(15:44):
So thank you Monica forcoming on, and thank you
everyone for your supportand happy home buying.
Monica (15:49):
thanks for having me.
And, , we're here to answer anyand all questions you guys have.
Welcome to the first Time Home Buyers podcast.
Today I wanna talk aboutwhen buying a home, how
much will it actually cost?
There's more than just thedown payment to think about
think.
We've got Monicaagain with us today.
(00:20):
She's a real estate agentwho's gonna give us an
idea of what kinds ofexpenses you can expect.
When purchasing a home, I wantedto just go from the beginning
of the process through the end.
What is the first thing,Monica, that a home
buyer will need to pay?
Monica (00:35):
Hi.
Nice to be here again.
So thanks for having me.
so again, the first thingregarding finances that is
truly the most importantaspect for home buyers is to
speak with a lender right offthe bat, even if you're not
thinking of purchasing a homefor another six to 12 months,
it's extremely beneficial.
Speaking with a lender earlyon is so that they can help
you with any credit issuesor finance concerns, or
(00:56):
just simply start you onthe process to which loan
type will be best for you.
Lenders are such a fantastictool for you as home buyers
because they let you knowhow much you truly have
to have saved or willneed for this process.
And they're also there toanswer any and all questions
you have about this process.
So when you are trulyready to purchase a
home, you'll be prepared.
Phil (01:16):
Yeah, and feel free to reach out to me anytime.
I can.
Look at your finances and letyou know pretty easily if you
have enough money saved up orabout how much you might need
if you're having credit issues.
We do have a soft pulse, soit doesn't affect your credit.
and a great partnership with acredit consulting group that was
actually on our last episode.
They can help get youwhere you need to be
(01:38):
for purchasing a home.
And our listeners get a freeinitial consultation just
by mentioning the podcast.
Monica (01:43):
So moving forward to the subject of costs
that you'll actually needwhen purchasing a home.
I'm gonna kind of start withthe process from the beginning.
Let me first start off by seeingthat one of the most asked
questions I get right awayfrom buyers is, how much do I
have to pay you as a realtorto represent me to buy a home?
The seller of the home isusually the one that pays
the cost of the realtors.
(02:05):
The seller will pay a commissionto the listing agent who is the
one that is selling the house.
They then in turn, givea part of that commission
to the buyer's agent whowould be representing you.
That commission is pulled fromthe profits of the home, so it's
already built into the pricing.
Even though you aren't directlypaying your agent to represent
you when you buy a home.
What you aren't paying mefor are any kinds of hourly.
(02:28):
Gas mileage, , thosekinds of things.
They're all just buyers agentcosts of doing business.
So that's why it's reallyimportant to find an agent
that you really like and thatwill work hard for you and
really communicate with youabout the entire process.
Once we have found your homethat you have love and you
have had your offer acceptedon it, you will typically
have earnest money due.
Now, earnest money is adeposit made to the escrow
(02:50):
account that represents abuyer's good faith to the home.
This money is due within thefirst three days of opening
escrow and will be done througha wire transfer at the bank.
Not wiring these fundsover or delaying this could
possibly mean losing thathome because it's part
of that normal contract.
the amount of the earnestmoney is gonna vary, and it
can range from about one to3% of the purchase price.
(03:11):
Some of the sellers mightask for a higher amount to
be deposited because it showsthem that you have more skin
in the game, but I, as anagent, try to keep it at
1% of the purchase price.
So for example, on a $500,000home, it's gonna be anywhere
from 5,000 to $15,000.
Again, going at the 1%.
Where I going at it wouldbe closer to the 5,000 mark.
The more you put in theearnest money, the stronger
(03:33):
your offer is to the sellers.
Just be aware that you wannamake sure that your money
is protected by your offer.
This is something that yourrealtor should definitely.
Talk to you aboutfurther in depth.
Now, should something happenduring escrow that was not
the fault of the sellers,the sellers may be entitled
to keep this earnest money.
So for instance, you can'tback out of an escrow on a
house because a better housecame on the market towards
(03:55):
the end of this escrow.
Now that earnest money thatbeginning of the escrow
is not just lost money.
So don't be afraid for thatat the end of the escrow.
It's usually appliedtowards your closing costs
or your down payment.
Even still on a no down paymentloan, I highly recommend
doing a minimum of $1 to upto a thousand dollars just
to, so that you are serious.
(04:16):
Again, make sure you speak withyour lender and your realtor
about the earnest money becauseevery home will be different.
Phil (04:21):
so now you've got your earnest money.
What else will youneed to pay for?
Monica (04:27):
this is what I like to call phase three
of buying your home.
This is when you're gonna begetting into the inspection
in the investigation period.
Your sales contract willspecify how much time you
have to review the home, haveinspections done, and ultimately
decide if you are going tomove forward or terminate
the contract based on those.
Phil (04:43):
Okay.
Can you give us an ideaof the inspections and
maybe how much are theircosts associated with them?
Monica (04:48):
Of course, so there's gonna be a
general inspection done.
We did an episodeon this already on
episode 11, I believe.
So definitely listen tothat one to get more details
on what that involves.
No matter if you are a renterliving in the home, you're about
to purchase or this is a newhome for you, I recommend fully
getting a home inspection done.
I like to set this up usuallywithin the first week of opening
(05:09):
escrow because the sooneryou know about something, the
sooner we can get it fixed.
This, is gonna show you whatpotential problems there
could be with the home.
The inspector is gonnago over the entire house.
He's gonna look inside and out.
They will test as muchas they can that can
be tested in the home.
, they'll put together avery in-depth report of
findings, both good and bad.
And the cost is usuallyaround 275 to $400.
(05:32):
And it really just dependson the size of the home.
the cost of this is dueat the time of service
from you as the buyer.
And most inspections takecash check, credit card,
debit card, and everyinspector is different.
So remember that.
Do some comparing or ask yourrealtor for some recommendations
for an inspector.
Now, if you have thingslike a pool, a septic tank,
(05:53):
older roof, air conditioningissues, electrical issues,
or even foundation issues,then you'll want to bring
in an additional specialist.
Pool inspections can beupwards of $400 depending
on the amount of equipmentyou have in the home.
But sometimes things likeroof inspections can be a
no charge inspection froma roofing company who will
come out and let you knowwhat work needs to be done.
(06:15):
How I help my clients is Igo over the home inspection
report with you as the buyer,page by page, and if there
is something that needs tobe inspected, additionally,
I'll call in, , and setup other inspections for.
Again, any inspections youget done is on your cost and
is to be paid at the time ofinspection, not through escrow.
You are welcome to have as manyinspections done as needed,
(06:35):
and as long as it's in yourinspection period, you're fine.
Phil (06:38):
Also, we never advise anyone to skip an inspection.
And if you have specializedequipment or older features
to the home, or it's just anolder home in general, you'll
be spending more on that.
Monica (06:49):
you should also consider getting a
termite inspection done.
This could cost around 150to $200 for the inspection.
many loan programs require atermite report and sometimes
this may be something thatthe seller pays for as well.
it's gonna depend on howyour realtor writes up
that contract for you.
Should there be any termitedamage that's gonna be a
separate cost to fix andrepair the structures of
(07:09):
the home that were damaged.
, so depending on how thecontract was written up, either
you or the homeowner will beresponsible for paying for that.
Another thing I didn't mention,there are cases where a seller
will pay for some items.
For example, the terminatedinspection or the home warranty.
The home warranty will be ayear of coverage on the home.
Should anything happen tothe AC or hot water heater,
(07:30):
usually it's around $700, but itdepends on the size of the home.
and if you have a pool or not.
Now, I don't ever suggesthaving a seller pay for
inspections aside from thetermite report because it
could become a conflict ofinterest, in my opinion.
So again, it's all based onwhat you and your realtor have
discussed and how your realtorwrites up your contract.
Phil (07:50):
right?
So inspections are gonna costyou, $300 or more depending
on the home size and features.
And then there's another costthat isn't an inspection,
but usually happens inthe same time period.
And that's an appraisal, ahome appraisal is done to
determine the value of the home.
Most loan programs will requirethis prior to funding a loan.
(08:11):
Lenders don't want to approvea home loan if the home isn't
worth what you're paying for it.
Appraisals are going to runaround $600, but that can
vary by appraisal company,and if you're trying to get
it done in a rush, thereare extra charges that can
be a few hundred dollars.
Sometimes.
This again, will be paid byyou as the buyer and will
(08:33):
usually be done in the firstweek right after escrow
opens that we can go aheadand get that appraisal done
right away at the beginning.
We usually do this througha credit card payment.
Your lender is gonna goahead and send you an
email with a link and yougo ahead and pay for it.
So we've gone through the home,we've done our inspection.
, we've removed thatcontingency, right?
Monica (08:54):
Right.
So removing the contingencymeans that as a buyer,
you weren't able to backout of the contract for
that specific reason.
and we have specific timeframesto protect you, which usually
is about 17 days afteracceptance of your offer to
get those inspections done andaccept that you are okay to
move forward in the process.
Again, this all determines onhow your realtor has written
(09:15):
up the contract however, thatcontingency period also protects
you as buyers as well, becauseshould you find something
major wrong with the home thatperhaps the sellers are not
willing to fix or credit youa dollar amount towards fixing
it, then you can safely backout of that contract and still
get your earnest money back.
You'll only be out thecost of the inspections
and the appraisal.
So as long as everything comesback fine with the appraisal,
(09:37):
we're really in a good spot tomove forward with the purchase.
The next things thatwe'll be looking.
Are paying for the closingcosts and the down payments.
Phil (09:46):
Your down payment will range anywhere from
3% to 20% on average, andthat money will need to be
available to wire before yousign your final paperwork.
So, Make sure that you have thatin your account and available
for things like FHA loans,that's three and a half percent.
If you're doing a VA loan or aU S D A loan, that might be 0%.
(10:07):
So it all depends on thatloan type that you've got.
Now the next thing is closingcosts, and those are fees and
expenses that you're gonnaincur for purchasing a home.
Those are gonna be thingslike your loan origination
fees, appraisal fees,title, search and insurance,
maybe survey fees, escrowsclosing fees, notary
fees, document preparationfees, and recording fees.
(10:31):
The total amount that you payin closing costs varies a lot
depending on your location, yourcounty, even the day that you
close, but typically it's gonna.
From about 1% to 3% ofyour purchase price.
So again, On that $500,000example home, this will
range anywhere from $5,000to $15,000 on top of any
(10:53):
other fees you're paying.
Your loan officer will giveyou documentation that shows
you which of these feesyou can actually shop for.
A notary fee, for example,could be one area that
you could save money on.
, while the appraisal fee isn'tsomething that you can negotiate
or shop around and find a lowerrate, so definitely talk to
your loan officer about the loanestimate and the fees on there.
(11:13):
If you're trying to reduce theamount of your closing costs,
Monica (11:16):
amount, there's usually not too much that you can reduce
there, but every dollar mattersand just knowing what you as
the buyer are really payingfor is truly what matters.
Phil, is there a timelineon when they pay their down
payment versus when theypay their closing costs?
Phil (11:29):
Typically, you're gonna have to wire your closing costs
and your down payment into theescrow account before, usually
a day or two before the actualsigning takes place right before
you close and get your keys.
let's say you've closedescrow, you've got your keys.
What kind of home expensescan I now expect after moving?
Monica (11:50):
Well, you have to get your utilities
on and into your name.
That's the most important one.
Some of those may requirea deposit, so definitely
budget for that.
Some homes may be vacant andrequire more time ahead to
get the utilities turned on.
So I always recommend thatyou get the gas, water,
and electricity turned overinto your name as soon as.
Now the big thing is probablygonna be your moving costs.
(12:11):
If you are just moving acrosstown, your average price to
move a three bedroom houseis around $480 to about $800.
Cross country, you're gonnarun at least 2000 to $5,000
plus 50 cents a pound.
An average three bedroom homehas 5,000 pounds worth of.
So you could be spendingupwards of 5,000 to $15,000
(12:33):
to move from one home toanother cross country,
depending on how far and howmuch you're transporting.
And also the companythat you use.
Each company is different.
So definitely shop around.
Phil (12:43):
And then what other costs are there to consider?
Monica (12:45):
don't forget your furniture.
If you're moving into alarger home, especially from
an apartment, you may needto get some extra furniture
for the larger spaces andbefore you move everything
in, it's the perfect timeto paint or update flooring
if you need to or want to.
It's also a goodtime to make repairs.
To the home while nobody is inthere, especially repairs like
plumbing, which usually requireturning off the water to a home.
(13:07):
, last thing, you might alsoneed or want to get the
carpets cleaned or replacedand consider any necessary
landscaping costs, all ofthese costs and add up quickly.
So just make sure you do yourresearch on different companies
and budget for that as well.
Phil (13:19):
I think these are all really great things and
really encompass a lot whatyou're going to be paying
that maybe isn't as obvious,they're almost the hidden
costs of buying a home.
They're not part ofthe down payment.
They're not partof closing costs.
Now, any last thingsthat you wanted to
impart on our listeners?
Monica (13:35):
Yes.
I just wanted to stress onelast thing about finances
and the, the process.
Once you're in escrow, it isextremely important that you
do not apply for a creditcard like a Home Depot card
or a Kohl's card to save 20%.
don't go buy new furnitureand open a credit card.
Please absolutely donot buy a vehicle.
No new vehicles are allowedduring the escrow period.
(13:58):
It's really funny that I haveto say that, but those kinds
of things could put your debtto income ratio higher than
what the loan approves you for.
So please, please do notbuy unnecessary items until
after you close escrow.
If you wanna buy all the cars onthe lot or open 50 credit cards.
Day, that's totally fine, butdon't ruin your chance of losing
the home and possibly all thatmoney that you've invested into
it by doing something too soon.
(14:20):
we as realtors and lendersknow that life happens and
all that, but if somethingfinancially does come up, speak
to your lender immediately.
That's why it's so importantto have a lender that you trust
on your side that you can speakwith anytime so that he or she
can advise you on if somethingcould potentially cause you
your loan to not go through.
I tell my clients those 30days of escrow is a time for
(14:41):
you not to touch your money.
It's so important because oneminor thing to you could be a
huge thing to the underwritingteam or the lending team.
It's not worth it.
Don't risk it.
Again, we are based out ofCalifornia and it may be
different in your area, but thebest thing to do is always check
with your realtor or your lenderabout financial matters and any
numbers we have given you today.
Phil (15:02):
Yeah.
And again, thank you somuch for all of your wisdom
that you've given us here.
I think the listeners here,especially if you're a
first time home buyer, maynot know what's all the
different costs associated.
But again, please head overto fthbpros.com, our website,
where we have all of our podcastepisodes available, articles
(15:22):
and newsletter and resources,along with our Facebook group
where lenders and agents canhelp answer your question.
and you can also getMonica's information.
You can reach her directlyover the phone, (951) 395-1848
or Monica@HomesMM.com.
I'll include that in theshow notes and you could
also get it from our website.
(15:44):
So thank you Monica forcoming on, and thank you
everyone for your supportand happy home buying.
Monica (15:49):
thanks for having me.
And, , we're here to answer anyand all questions you guys have.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Therapy Gecko
An unlicensed lizard psychologist travels the universe talking to strangers about absolutely nothing. TO CALL THE GECKO: follow me on https://www.twitch.tv/lyleforever to get a notification for when I am taking calls. I am usually live Mondays, Wednesdays, and Fridays but lately a lot of other times too. I am a gecko.