Home Buying Costs Checklist

Navigating the home buying process can feel overwhelming, but understanding the costs and what to avoid can make your journey to homeownership much smoother. Here's a simple a checklist of the costs involved. By no means is this exhaustive with every detail but does give a quick insight. I can guide you through this every step of the way.

Out of Pocket Expenses Before Closing:

1. Earnest Money (typically 1% of agreed on price)
2. Option (a few hundred dollars based on per day fee)
3. Home Inspection ($400-$500)
4. Termite Inspection ($75-$150)
5. Foundation Check - Optional ($300-$600)

What to Bring to Closing:

1. Certified or Cashier's Check for down payment and closing costs
2. Identification for all purchasers
3. Any other required documentation you asked to bring

Paid at Closing (the cashiers check you bring will include the cost of the expenses below):

1. Down Payment - typically 3%-20% depending on the type of loan you choose.
2. Loan Origination Fees (.5% to 1% of the loan mortgage amount)
3. Title Search and Insurance (.6% to .9% of sales price of the home)
4. Escrow or Closing Fee (often split)
5. Recording Fees
6. Prepaid Property Taxes
7. Prorated HOA Fees (if applicable)
8. Transfer Taxes (if applicable, local level)
9. Survey Fee (if required)
10. Attorney Fees (if applicable)

Things You Should Avoid Doing Before Closing:

1. Making Large Purchases: Buying big-ticket items like a new car or furniture on credit can negatively impact your credit score or debt-to-income ratio, potentially jeopardizing loan approval.
2. Opening New Credit Lines: New credit inquiries can affect your credit score and might signal to lenders that your financial situation is changing.
3. Switching or Quitting Jobs: Lenders look for employment stability. Changing or leaving your job could raise concerns about your ability to repay the loan.
4. Moving Money Around: Large, unexplained bank transfers can complicate your loan process. Lenders want to see a clear, consistent financial picture.
5. Ignoring Lender Requests: Failing to respond promptly to your lender's requests for documentation or clarification can delay or even cancel the loan process.
6. Co-signing Loans: Taking on additional debt obligations can alter your debt-to-income ratio, potentially making you less attractive to lenders.
7. Paying Off All Debt: While reducing debt is good, paying off everything might look suspicious or might not leave you with enough cash reserves for the home purchase.
8. Ignoring Contingencies: Not fulfilling or addressing contingencies in the contract (like home sale, inspection, or appraisal) can lead to issues at closing.
9. Overdrawing Bank Accounts: This could show instability in your financial management, which lenders might view negatively.
10. Making Cash Deposits: Large cash deposits without documentation can raise questions about the source of funds, potentially triggering anti-money laundering checks.

Remember, the goal is to maintain the financial status quo as much as possible between the loan application and closing to avoid any red flags with lenders.

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