Up Front Costs Needed when Purchasing a Home

There are a few things that come out of pocket before you close on a home. In this video, I discuss the things you pay for, out of pocket, when purchasing a home. I am a mortgage broker in Colorado and can answer any questions you might have about the home purchasing process.

Michelle Killmon NMLS ID# 2288247 | Branch NMLS ID# 2269324 | Pink Home Loans | www.nmlsconsumeraccess.org | Equal Housing Lender

Transcript:

Hello. Michelle Killmon, Your Dependable Lender for residential mortgages. Today I am going to talk about up front costs needed when purchasing a home. You've probably heard that you need to save money for a down payment, which can also be relative because there is down payment assistance programs out there, but sometimes these fees are not readily discussed. So, I wanted to share that there are things that come out of pocket when you are purchasing a home besides for a down payment. There are 3 different things. The first one I want to talk to you about is called earnest money. Earnest money is something that you will provide the seller of the property that you are interested in buying to show that you are serious about the transaction. Earnest money is typically 1% of the sales price of the property that you're looking at. It's something that you will pay them and then, you can use that money at closing. So, it does come back to you, but you will have to have it ready to utilize up front. The second thing that I want to talk about is appraisal cost. You will get an appraisal done on the property that you're purchasing to show the current value of that property. The appraisal fee can be up to $850. Mines usually around $650, but so I save my clients some money there, but it can go up that high. Just so you have that amount saved. I still tell my clients that amount just in case and then they have that extra couple hundred bucks, which never hurts. Then the last fee I wanted to talk about is inspection cost. You will get an inspection done on the property to make sure that there is nothing crazy wrong with the property, everything is in decent order or it isn't, and shows you things that are wrong that need to get fixed before the closing happens and make it the seller's responsibility to fix it or you guys can negotiate whatever that looks like, but it's something that gets done on the property so you know the condition of it and anything that's needed to be addressed. An inspection fee can run from $250 up to $500, just depending on who is used. I typically tell my clients to save up to $500 and then that way, if it's less again, they just have extra money in their pocket when it comes down to it. So, these are all things that you will pay before closing. I just wanted to give some education there so that way you also know what you should be saving. If I can help you purchase something in Colorado, please let me know.

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