Out of Pocket Expenses
There are some out of pocket expenses that you will have when buying a home that you should prepare for.
Initially you will have earnest money that will need to be deposited right away after you are under contract on a home. Generally a good rule of thumb for Earnest money is that it’s equal to 1 percent of the purchase price of the home. This is the goal for Earnest money, but it’s not a hard and fast rule that is required. if the money is in a 401k or somewhere where it is NOT in your bank account, you will want to be ready for that. Every company & 401k works differently and their processing times vary so just know and be prepared if you’re withdrawing from your 401k.
Another expense you will have as a home buyer is home inspection fees. While inspections are not mandatory, they are highly recommended and most certainly worth it! Even if you found nothing wrong, it’s peace of mind! And when you’re spending hundreds of THOUSANDS of dollars, a few hundred is just a drop in the bucket! Inspections for mold, meth, and termites have an additional cost.
Some buyers will be responsible for their appraisal cost – so check with your lender to see how that works in your particular situation. Appraisal costs vary between $500-700 dollars.
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