UPDATED 9/6/2016. Buying a home in the Greater Austin Area is a tremendous time in your life and is one of the biggest decisions you will ever make. While this event comes with a lot of excitement, it also comes with some mystery and a lot of questions as well. Can I afford to buy right now? How much is it going to cost me? How much cash do I need up front to buy a home in Austin?
Personally, I hate surprises. That hate is motivating me to make sure you have this information. I do my very best to make sure that everyone I work with or potentially work with fully understands the home-buying process and how much it will cost them. The information below represents that most accurate and up-to-date information I know on how much you will likely spend to buy a home. If you have any questions about buying a home or how you can best be prepared to buy your next home, drop me a note or give me a call.
- Option Money – $100 – Due 48 hrs after your offer has been accepted > paid to the seller and usually buys you 7-10 days of an “option period,” a period that begins when your offer has been accepted and gives a buyer the unrestricted right to cancel the contract for the specified time period. This amount is usually applied toward the money you must pay at closing.
- Earnest Money – $$$ (usually 1% of sales price – i.e. $2500 for a $250,000 house) – Due when the contract has been accepted > paid in certified funds (cashiers check) to the title company and is a “deposit” on your purchase. If you chose to cancel your contract anytime after the option period, you usually will not get this money back. This amount is also applied to the money you must pay at closing.
- Inspection Fee – $300-500 – Due before you receive your inspection report, usually performed during the option period > While an inspection is not required, I would advise any client to inspect any home they are purchasing. There a many potential issues with a home that are invisible to the naked eye and require a professional inspector.
- Termite Inspection – $100 – Due before you receive your termite inspection report > A termite inspection is required any time you are using a VA Home Mortgage, but is not required for other loan programs. It can usually be bundled with a home inspection for a better deal and is also usually performed during the option period.
- Survey – $425 – Usually due when your lender orders the survey > Often, a survey is provided by the seller and a new one is not required. If there have been changes since the last survey was made or if there is no survey is available, a new one will have to be ordered. Who pays for the new survey is something that is negotiated as part of the contract so try to get your agent to get the seller to pay if a new one is required.
- Appraisal – $400-$500 – Usually due when you lender orders the appraisal once the option period is over > The lender will require an appraisal for any loan they fund. This is an item the buyer always pays for and is usually not ordered until after the option period is over to avoid having you pay for an appraisal if you cancel the contract during that period. The lender uses the appraisal to determine if the property is worth the price you are paying for it.
Other Possible Costs
- Repairs – Amount varies depending on repairs > most often, repairs performed on the home before closing are paid for by the seller, but if a seller is unwilling to pay for a repair, they may agree to do the repair if the buyer pays for a portion of the work. In that case, you might have to help pay for this upfront.
- Termite Treatments – Amount varies depending on treatment area > like basic repairs, you might have to help pay for this treatment if you want it performed prior to closing
Keep in mind, the costs above are the costs you should expect prior to closing. You will certainly have to have money for a down payment on probably closing costs as well. If you have questions about buying a home or how much you should be prepared to spend, drop me a note or give me a call at 512.636.9707.