Additional Costs To Consider​

Unforeseen individual costs can add up quickly, so it is best to understand as much as you can about the total cost of buying a home when preparing a budget.

Option Fee

This is fee paid to the seller in order to give the buyer the option to back out of the contract for any reason. It is paid by the buyer after the contract is signed by both parties and is almost always applied to buyer’s closing costs.

Inspection fee

This fee is optional, though highly recommended. It is paid out of pocket by the buyer and provides the buyer with a professional evaluation of fundamental components of the house.

Appraisal Fee

The appraisal establishes the value of the property. It will dictate the amount a lender will loan a buyer for a particular property. This fee is negotiated and can be paid by the buyer or the seller, depending on the terms of the contract. Very often it is paid by the buyer. This fee will be paid at closing by the party identified in the contract, usually the buyer. 

Escrow Account Funding

An escrow account is where the buyer will make monthly payments to cover property taxes and home owner’s insurance to the lender. The lender will make payments, usually on an annual basis. Often times, a “cushion” is required by the lender. This is similar to a security deposit and usually consists of 3 months expected property taxes and 1 year home owner’s policy.

Moving Costs

These will be paid by the buyer and will vary widely based on your circumstance and preference. 

Cost To break a lease

If you have just signed a lease you should talk to your property manager about the most cost effective way to get out of it. Subletting is usually a good option, if possible.

Home Owners association fees/dues

There can be both one time and recurring fees associated with living in an HOA. Be sure that you understand both and have incorporated them into your budget.

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