Expected costs of buying a home, is an important question to research before making the commitment to become a home owner. For more specific details about costs associated with buying a home, continue reading below.
Over the last week I have had several questions put to me about the costs a buyer should expect when buying a home in Utah.
First, commissions. In a typical home purchase the person selling a home will pay a commission to their agent (the listing agent). This is normally around 6%. The listing agent then offers a portion of that commission, usually 3% to the buyers agent for bringing a buyer. In a situation like this the buyer would normally not be paying any commission of fees to the agent that is spending time, bringing them around to see homes. BUT, this will depend on the contract that the buyer signs with their agent. If you are buying a home in Utah do not feel awkward about asking your agent how the commissions will work with them, and where it is explained in the buyer - broker contract.
Second, closing costs. An average priced home in Utah is somewhere on the $200,000 to $200,000 range these days (look at average Utah home prices here). Typically when buying a home in Utah that is close to these prices a buyer can expect to pay about 3% of the purchase price towards the costs of buying a home. As a buyer you have to pay a title company to give an insurance policy to your lender (if you are using one) guaranteeing the lender that there are not any other ownership claims against the home. Buyers also pay their lender some fees (including an appraisal, document prep fees, origination fee, etc). As with the buyers agent, do not feel bad about asking your lender to explain costs. It is common for a buyer to ask a seller to pay up to 3% towards their closing costs in Utah, helping buyers to cut down on the required cash out of pocket to buy a home. Talk with an Effective Agent about requesting these costs and keeping your offer competitive.
The next item that buyers will need to plan for is the down payment. While there are programs that allow Utah buyers to buy a home with zero down, these are generally based on the location of the home (rural areas), or the income of the borrower (low income). Most buyers should plan on putting a minimum of 3.5% down for FHA loans, or 5% for conventional loans. Contact the Effective Agent team to get in contact with an experienced lender who will guide you in choosing the best type of loan.
Micah Olson, Associate Broker
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