Did You Know About These Fees?
EARNEST MONEY DEPOSIT (EMD)
Earnest money deposit, sometimes called a good faith deposit is a way of "reserving" the home you want to be yours. It tells the sellers you are serious enough about their home to put money down before you move in. The amount of money varies based upon the price of the home. Usually it is recommended that you put down roughly 1% of the sale price. This does not mean you are required to put that much money down, this is just the recommended amount. Many people wonder what happens to this money once they are under contract, don't worry the money doesn't disappear. This money will be credited towards the total amount you owe when you head to the closing table.
Depending on the type of loan you have been approved for will determine the amount of money you will need for your down payment. There are loans that allow for a 0% down payment and other loans that will require more money be used for a down payment. For a better understanding of how much your down payment will be, you will need to contact a lender to find out you loan type. Once this has been established, they can provide you with a monetary value that will be your down payment for your home. The down payment is also determined by the sale price of the home, the higher the amount, the larger your down payment will be...unless you have a 0% down loan.
Depending on the time of year you choose to purchase your home will dictate the amount of property taxes you will be required to pay. If the current owners have already paid their property taxes for the year, then you will be required to pay for the time you will own the home. If the current home owners have not paid the property taxes, then you will receive a credit from them for the days they owned the home. Taxes vary based upon the neighborhood of the home, where some are higher than others. Where you choose to buy your home will also factor into how much your property taxes will be. Property taxes also depend on the option to make the home you are purchasing your primary residence. If you choose to make the home your primary residence, you property taxes will be about 40% lower than if you are using it as a non-primary residence.
Personal Mortgage InSURANCE (PMI)
Personal mortgage insurance is used to help protect the lender in the event where the borrower defaults on their loan. With a conventional style loan, once the borrower owns 20% equity in their home, the PMI will be removed from the monthly payment. If you choose to pay 20% on your down payment up front, PMI is not added to your monthly payment. Other loans, like FHA, will have PMI in the payment for the entire length of the loan.
Although home inspections are not required, your realtor will often advise you to have someone professionally look at your home. An inspector will take time to go through important items in the home to make sure everything is working properly. The inspector will also note any items in the home that are not up to code or standard. Home inspection prices are based upon the square footage of the home and the average home inspection price is between $300-$500. If you want to have additional tests done like termite inspection, radon testing, or mold testing there will be additional costs per test.
Closing costs are associated with the finalization of your loan and are usually paid at the end of the transaction. Items like appraisal fee, mortgage lending fees, title fees, and other fees that are associated with transferring the title into you name. Although it is recommended you pay the closing costs yourself, there is the option to ask the seller to contribute towards paying them. In a competitive situation, paying closing costs out of your own pocket will make your offer look stronger.
HOME OWNERS INSURANCE
Home owners insurance is to help protect your home against disasters that may damage to the interior or exterior of your home. This also includes injuries that occur on the insured property and damage that may occur to personal belongings. Each policy covers different items so make sure you know you policy well in the case that you need to use it. It is your choice to decide who you are most comfortable with when picking the insurance for your home. We recommend getting quote from multiple organization to ensure you are getting the best rate for your home.
Have a few questions? Don't hesitate to contact us at anytime!