Unexpected Up Front Costs In Purchasing A House

In my first blog on "Unexpected Costs In Purchasing A House"  I covered Closing Costs Borrowers will be required to pay at the Closing.  In this blog Unexpected Up Front Costs In Purchasing A House, I will cover costs which a Buyer normally incurs up front before the Closing.  These up front costs are not only a surprise to First Time Homebuyers, but most of the the time to Buyers who have purchased a home before as well.

Buyers are usually unaware they will have to submit money with their offer on a house.  This money is known as Earnest Money, or a Good Faith Deposit.  The money put down with an offer on a house can range anywhere from $500 to as much as 20% of the purchase price or more.  Most of the time the range I see with First Time Homebuyers tends to be between $500 to $5,000 here in Connecticut.  This is money which many times is unexpected and the Buyer is not prepared to pay, especially if the funds they planned to use to purchase the house is coming from Gift Funds, or from a 401K retirement account.

The financial stress continues as the Realtor completes the offer and dates are filled in for inspections, and the Buyer hears for the first time they will need Up Front funds for inspections such as:

• Home Inspection
• Well inspection
• Septic inspection
• Radon inspection
• Wood Boring Insect Inspection (required on all VA Loan, and on other loans if active infestation is suspected by the Appraiser)

These costs can start to add up quickly, and further create a financial strain.

The Up Front Costs do not stop there, they continue when the Borrower meets with me.  Even though the fees the Borrower will have to provide me Up Front are part of the overall Closing Costs I listed in my previous blog "Unexpected Costs In Purchasing A House"  having to wright out a check at time of Mortgage Application for:

• Appraisal Fee
  
• Application Fee, or
• Processing Fee

Many times Borrowers are not expecting to pay these fees so quickly in the process, even though they were informed of this at time of Pre-Approval. Also if the house was winterized, it will have to be de-winterized before the Closing so the Appraiser can verify there is:

• Running water
  
• No leaky pipes
• Furnace is running (if house is heated by oil, gas, or propane)
• Utilities are functional

These costs can add up quickly, so it is understandable why the stress of purchasing a home starts very early for Buyers, and they see their available funds being depleted quickly.

This is an important reason why Buyers need to work with a trusted Realtor and Loan Originator who realize the stress Buyers/Borrowers will face early in the process, and are prepared to be a calming influence.  These Unexpected Up Front Costs In Purchasing A House are just one of many reasons why Buyers need to be represented by a Realtor, and Loan Originator who have a thorough knowledge of the Home Purchasing process, who have their best interest in mind, and will hold the Buyers hand from home search to Closing.

 

******************************************************************************

 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com