The purpose of this article is for buyers of a home in Lake Elmo, MN to consider the different costs that they will need to pay up front when buying a home. By knowing what kinds of costs a buyer will encounter they can start saving their hard earned money in anticipation of purchasing a wonderful home in Lake Elmo MN.
a. Earnest money - this is money that a buyer will have to put down up front when writing a purchase agreement on the Lake Elmo MN home. The amount can range on what is expected for an earnest check as it is a negotiable amount between seller and buyer. Typically one can expect that an earnest check amount of 1% of the sale price is standard. There are times one can put down less but again it is a negotiable amount between all parties in the transaction.
b. Homeowner's Insurance - your insurance agent will help you with insuring your new property and you will need to pay the premium. Upon paying for this you will receive an insurance binder from your insurance agent, which you will need to bring to the closing. The cost will vary on the price of the home as well as the policy you purchase. If one calculates between $500 and $3,000 it likely is a good range depending on the variables already mentioned.
c. Home Inspection Fee - Upon making an offer and having the seller accept the offer the next step is for the buyer to hire a home inspector. Prices will vary by whether it is for a multi-family property vs. a single family property, as well as on the size of the property. However, one can reasonably expect a home inspection fee to range between $275 - $400.
d. Well & Septic Inspection - One can expect a well and water inspection cost ranging from $250 - $350. This cost can vary significantly depending on how many different types of water sampling you are requesting a certified laboratory to test for. A septic inspection can vary as well depending on whether the septic tank requires pumping in order to inspect or not. One can reasonably expect a cost in the $150 - $300 range.
e. Radon Testing - Based on our experiences with Lake Elmo MN home buyers there is only a small percentage of all buyers who have a radon test performed. We always suggest for buyers to have this done if they plan on spending quite a bit of time in the basement. A good radon test by a professional organization utilizing an actual pump can cost $100 - $300. Radon mediation can cost between $1,000 and $2,000, but is usually negotiated in having the seller install the radon mitigation piping and air pump.
f. Underwriting Fee - Most lenders charge an underwriting fee to process your loan application. This can often be negotiated but typically costs between $200 - $400 and is incorporated into your mortgage and paid at the closing table.
g. Origination Fee or Commitment - This is a fee lenders charge for extending a loan above and beyond the interest they charge. If you are considered a credit risk it is possible you can charge more. The cost is usually 1% of the loan value and is incorporated into your mortgage and paid at closing. The origination fee can be negotiated with some loan officers.
h. Appraisal Fee - Once the purchase agreement was accepted by both parties (sellers and buyers) and upon lifting the inspection contingency the mortgage company has an appraisal performed by sending out an Appraiser to determine the value of the property. This fee can range between $350 - $450 and can be incorporated into your mortgage and paid at closing.
i. Plat Drawing/Survey - Some lenders could require a drawing illustrating the lot lines, easements, and right of ways. Should this be the case the cost can range from $50 - $100 and is paid at closing.
j. Mortgage Insurance, Private Mortgage Insurance (PMI) - This is the insurance required on some conventional loans. The amount you pay your loan officer will be able to discuss in detail but the cost is incorporated into your mortgage and paid at closing. Costs can range from $500 to $1,000 for every $100,000 of your mortgage meaning the larger the loan the larger the insurance premium.
k. Mortgage Insurance Premium (MIP) - Used for FHA loans and the % percentage changes periodically but a rough estimate is between 2% to 3% of the loan, plus approximately 1/2% annually for a certain number of years.
l. Mortgage Registration Tax - This tax is from the state, county, and city. This rate is variable but all mortgage borrowers must pay.
m. Settlement or Closing Fee - This fee is paid to the person conducting the closing and typically ranges from $350 - $450.
n. Credit Report - Lenders will order a credit report for all persons applying for the mortgage loan. The report ranges from $50 - $75.
o. Recording Fees - These fees are passed on to the county where the property is located to cover document recording costs. The fee can range from $25 - $50.
Remember...there is much more that goes into the buying of a Lake Elmo MN home than most buyers are aware of, subsequently do it the right way to protect your interests and seek out a top selling and experienced real estate agent in Lake Elmo MN making the home buying process a fun experience.
Contact John & Becky Durham to schedule an appointment at the contact information below to discuss your real estate needs.