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Welcome to my weekly Q&A!
Today’s question: What upfront costs can I expect when buying a home?
After your offer is accepted there are a few upfront costs that you need to be mindful of: your Home Inspection, Termite Inspection, the Appraisal, and your EMD.
The Four Components of Upfront Costs
Home inspections usually start around $350 and go up from there. If your home inspector uncovers any specific issues, major red flags, you’re going to want to get a licensed professional with that area of expertise for a more thorough inspection and those costs can vary. Your termite inspection can run you about $100 and then your Appraisal. This is a lender requirement in most cases and several factors determine the price of that: Size, location, condition. I’ve seen them come in anywhere between $500-$1000.
Lastly is your EMD, your Earnest Money Deposit, this is usually at least 1% of the purchase price of the home and needs to be deposited to the escrow company within 3 business days of offer acceptance or whatever your contract states that you’ve agreed to. Now, this does go towards your down payment and you do get it back if you decide not to move forward with the purchase of that home, assuming of course you have not breached the contract. Now again, these costs can vary based on the size of the home, if there’s a pool, or any other things you want the inspector to inspect. But this gives you a really general idea of what you can expect moving forward.
…Now for some bonus content!
Why Are There Upfront Costs in Buying a Home…?
I know what you’re thinking… that’s a lot of fees! If you total up my estimates for your Home Inspection, Termite Inspection, the Appraisal, and your EMD, that’s roughly $1000 (or more, depending on your inspection needs) in addition to the 1% Earnest Money Deposit. BUT, keep in mind that the EMD fees are part of your down payment, meaning that’s money you’ve already saved up going exactly where it’s supposed to go. If you decide not to move forward with the house you will get your money back, as long as you’re within contract.
….And Do I Really Need to Pay Them?!
Although the Home Inspection, Termite Inspection, and Appraisal fees aren’t refunded if you decide not to move forward with a house, they are always 100% worth the effort. I can say from experience that these upfront costs can save you tens of thousands of dollars in the long run. Unfortunately, I have seen people (myself included) get excited when their offer was accepted on a home, then realize that the home had more problems than they were willing to deal with. My motto is better safe than sorry, it’s why I’m so thorough and ask so many questions. I want to hand over keys to a house you’re thrilled about, not one that is going to give you a headache and cost you more down the road. We’ll find the perfect house for you and make sure that it’s worth every dollar.
Want to learn more? Send me a DM on Instagram or shoot me a text at 909-557-7096.
If you liked this post, be sure to check out my Instagram for more helpful reels! You might also like learning about Property Taxes.