For most people, a home will be the most expensive purchase of their lifetime. If you are considering purchasing your first home, you might be mulling over your budget to figure out your price range. While planning a budget, it is important that you do not overlook any upfront costs associated with purchasing a house, so that you are not surprised when it comes time to close.
After your offer is accepted, you will want to get the house inspected. Each situation and house will be a little different, but at the very least, you will want to get a general inspection of the house. For older houses you may want to schedule additional inspections such as sewage and wood inspections.
The costs of inspection can range from a couple hundred to over a thousand dollars. When it comes to inspections it is better to be on the safer side to make sure that you are not buying a faulty home or take on any unexpected repair and maintenance costs after the purchase.
Closing costs refer to the costs associated with closing a real estate deal. Buyers can expect to pay about 2 to 5% of the purchase price of their home in closing costs. These costs can include:
- Lender fees: Administrative costs for processing your loan application.
- Attorney fees: In Alabama, an attorney must be present at any real estate closings.
- Closing fees: Costs associated with transferring a title, such as payments to an escrow company.
- Appraisal fees: This is a fee to cover the cost of an appraiser to make sure that the sale price of the home is around fair market value.
Avoiding closing costs
In some cases, you may be able to avoid up-front closing costs by getting a no-closing cost mortgage. In these cases, your closing costs roll into your mortgage; you avoid paying costs at closing but will pay more long term.
However you decide to deal with the costs of closing on your new house, be sure that you understand the full scope of these costs to make a more informed budget for one of the biggest purchases of your life.