How much money, outside of the cost of the house, do I need to buy a house? [duplicate]

Question

I see a lot of help online for calculating the actual cost of buying a house - this includes things like down payments, calculating the monthly payments and interest rate, the real utility cost of owning a home, pretty much everything that goes into the actual purchase price and upkeep cost.

That's not what I'm interested in though.

What I'm interested in knowing is the less talked about cost of the process of buying a house - the closing cost, the cost of hiring a real estate agent, the cost of the inspection prior to buying, all the things that add up before the purchase even takes place.

In short, what is a normal range of cost for the purchase of a new home?

For a couple of assumptions to work off of:

• Assume my new home is in the range of $180,000 - $250,000 with a 5% down payment
• Also assume that I do hire a real estate agent
• Assume that I will be hiring an inspector for the entire property of the house
• Assume that I have agreed to cover closing costs
• BUT, if any of these costs are things that 'the seller would usually cover', then telling me that would be considered an acceptable part of your answer, so long as the actual cost of it is still included.
• Finally, moving costs should also be included - even though I know that's a normal cost for moving out.

The reason for this is - my wife and I are saving up for our first home purchase, and we're looking to go on the hunt next year. Since there are plenty of resources for the actual cost of the home itself, I'd like to know what the expected expenses will be for costs outside of the actual price of the home.

My specific circumstances are most likely to be - living in New York State, planning to move to the state of Maryland (to help support her parents as they grow older) and either rent for an additional year to save up, or buy a new place outright when we move down - so moving costs should also be included.

Answer 1

Here is a list of the buyer's closing costs taken from a settlement statement for a sale earlier this year. It's hard to estimate the amounts of these because each transaction is different, but where there is a typical cost, I've tried to list it.

• Prorations and Adjustments (i.e., things the seller has already paid through the end of the month that you are buying in -- if you're closing toward the end of the month, these shouldn't be more than a couple hundred dollars)
  • Property taxes
  • HOA Dues
• Loan costs (you won't have these if you're not taking a loan)
  • Origination fees (varies a lot by lender, something like 1/2% to 3/4% of the loan amount seems typical)
  • Discount points (a percentage of the loan amount)
  • Appraisal fee (about $500)
  • Prepaid interest (interest is due for the remaining days in the month you make the purchase -- the amount depends on the size of your loan and interest rate, but a few hundred dollars would be typical)
• Impounds (i.e., funds that will be held in escrow to pay costs you will incur in the near future)
  • Insurance (in this case it was 3 months' worth)
  • Property taxes (also 3 months' worth)
• Recording fees, taxes, etc. (i.e., taxes charged on real estate sales)
  • These vary by location. In the case I'm looking at there were two state taxes and two county taxes totaling about $3500.
• Title charges
  • Various fees charged by the settlement agent. (The largest was about $400, and I suspect it's proportional to the total transaction amount. The others were in the tens of dollars each).
  • Title search (making sure that the seller has good title to the property -- seems to run a couple hundred dollars)
  • Title insurance (insurance that pays out if for some reason it turns out the title search missed something -- these will be proportional to the value of the house. In this case it looks like about 5/8%).
• Miscellaneous charges
  • HOA dues (3 months)
  • Survey (a few hundred dollars, depending on the size of the lot)
  • Full year of homeowner's insurance premiums.

Answer 2

Since you mention a 5% down payment, one important item to mention is the costs associated with getting a mortgage (fees charged by the lender), which you can expect to be 2% to 5% of the purchase price.

The realtor fees (both seller's agent and buyer's agent) usually add up to about 6% of the price, but are often paid by the seller rather than directly by the buyer (although indirectly this may mean the seller wants a higher price for the house to cover these costs). This obviously will vary in FSBO sales, or if you don't have a buyer's agent.

Closing costs, such as city/state records fees, are generally covered by the seller (but this is not required). The exact amount will be highly location-dependent, since these include fees from local governments.

Another direct cost you will incur is home inspections. In my experience, this usually costs a few hundred dollars (will vary based on location, size of property, who you hire, etc.), and as a buyer you will typically pay the inspector directly (after an offer is accepted but before the sale is closed).

As far as the cost of moving, that could be a few hours of your own sweat and some food and beer for your friends, or a couple hundred (or thousand) for professional movers, depending on how much stuff you are moving and how far.

All together, you could expect to pay around 2-10% of the sale price for things other than paying the seller in exchange for the house. The exact amount will be very specific to your situation, but you should be able to get a pretty solid estimate for mortgage closing costs based on your expected loan size and lender, moving costs based on approximate distance moved and how much stuff you have, and inspection costs by shopping around local home inspectors.