Most people have a general idea on the expenses associated with buying a home. However, they have no clue on when they are going to have to actually “dish” out the money. Let’s lay it out.
Once you are in contract on a property, you will be required to put a deposit down. The deposit is a good faith gesture showing the seller that you are serious. The amount of your deposit is defined in your purchase contract. Generally, in California a buyer’s full deposit is approximately 3% of the purchase price.
You will have three days after all parties (buyer & seller) sign the purchase contract to put your initial deposit into escrow. Our clients usually put half (1.5%of purchase price) of the deposit into escrow. All of the money that goes into escrow can not be removed without written consent from both the buyer and seller.
Once all of your contract contingencies have been removed, you will be required to put the remaining deposit into escrow. Please keep in mind that your entire deposit will be applied to the balance of the down payment.
Also keep in mind that you can decide to put a full deposit as soon as you get into contract. Work with your agent to determine the best strategy on your deposit(s).
As soon as you are in contract, your loan agent will start preparing your final loan package for submission to the lender’s underwriters. An important piece of this is the ordering of the appraisal. The loan agent will order the appraisal from a third-party appraisal company. You will be required to provide a credit card at this time to pay for the appraisal. The cost of an appraisal varies based upon region, type of property (single family home, multi-unit, commercial, etc.), and the size of the property. Appraisal costs generally run from $400 to $600.
During the first 14-17 days after you enter into contract, you will do your inspections on the property. At a minimum, you will do a general home inspection and a pest/termite inspection. Results from the general home inspection, may require you to do other inspections (roof, pool, plumbing, etc.). Generally, inspections are paid for at the time they are done. However, some inspectors will allow you to pay at the time of the closing (an extra charge may be incurred for this).
Closing costs are the expenses associated with closing the transaction. They include, but are not limited to, such items as loan fees, title insurance, recording charges, impounds, mortgage insurance, home insurance, city/county transfer taxes, misc. title fees, HOA transfer fees, and notary.
Costs vary by region, but typically run from 2%-4% of the purchase price. They are paid at the time of closing (when you sign your loan documents). You should get an estimate to what these costs will be prior to your loan signing.
Here is a summary of costs and when they are typically paid.
|Initial Deposit,typically 1.5% of purchase price,Deposited to escrow company within 3 days of ratifying contract.|
|Second Deposit,typically 1.5% of purchase price,Deposited to escrow company when all contract contingencies are removed.|
|Appraisal,approximately $400-$600,Usually right after you enter into contract.|
|General Home Inspection,$350-$500,Generally paid at time of inspection.|
|Pest/Termite Inspection,$200-$375, Generally paid at time of inspection.|
|Other inspections as needed, $100-$250,Generally paid at time of inspection.|
|Closing Costs,Typically 2%-4% of purchase price, Paid at the time you sign your loan documents.|