Many buyers are fully aware that they will need to get a mortgage and pay a down payment. But many buyers fail to budget for expenses that will arise prior to closing on their new home. See below the top 3 payments that come prior to closing.
1. Binder Check
Upon the submission and acceptance of your offer you will need to submit a binder check to show your monetary intent to bind your contract to purchase. The binder check can typically cost you anywhere between $1,000 to $10,000. The standard in our Boston area market is $1,000 but in the event you are competing with other buyers you may want to up your ante to show how aggressive and serious of a buyer you are to beat out your competition.
2. Home Inspection
After you successfully get your offer accepted, you will likely have to schedule your home inspection. These can vary in costs depending on who you use. Expect to save $500-$1200. It could be more if you are purchasing a very large home and depending on who you use. Shop around and ask your real estate agent for multiple recommendations. Considering the market has been tough for many buyers out there, it is not uncommon that a buyer will pay for a pre-offer inspection, in which the buyer conducts a home inspection BEFORE submitting their offer with the intention to either waive or add negotiating terms to their offer. Although this is a great tool in a competitive market, you also need to budget for multiple home inspections and that cost can add up quickly!
3. Purchase & Sale Deposit
Once you made it past the offer acceptance and home inspection, you will work with your real estate attorney to review the Purchase and Sale (P&S). Upon the deadline of your P&S, the standard 5% down is due. This is 5% of your total purchase price. Some buyers may opt to put 10% down to be aggressive and this made known when you submit your offer that you plan to take this route.
In addition to these expenses above, you will likely pay closing cost fees to your real estate attorney and additional fees to your mortgage lender which may include appraisal fees, rate lock extensions and more. Be sure to interview your mortgage lender and real estate attorney early on so you are very clear what fees will be due from you and when these fees will be due.
If you have any questions at all, The Sylvia Real Estate Team would be happy to help you! Just contact us!
Disclaimer: All range estimates are based on the Boston area market. These rates do change but I have provided these details for informational purposes only. It is always best to shop around for all service providers to get a realistic number for your budget as you search.