Home Buying 101 in Bethalto, IL: Part 6 – How Much Do I Need to Buy a House?
Part 1: Know How Agency Affects You discussed the importance of finding a real estate agent to represent you.
Part 2: Will the Car Fit in the Garage? is about figuring out what is important now in finding your new home.
Part 3: What to Consider When Making an Offer talks about how to write an offer that is realistic and competitive.
Part 4: I Have a Contract, Now What? covers the inspections and appraisal process.
Part 5: Understanding Why Title is Important explains the options available in Illinois and the differences between them.
So you now have some very important information about buying a home. But one of the biggest questions on a buyer’s mind is, “how much money do I need hand over?”
I remember my experiences as a first-time home buyer. I worked with a couple of different agents and none of them told me up front what to expect, especially how much money out of pocket we would need to come up with. In the end, we wouldn’t have been able to get to closing if it hadn’t been for our parents.
When I became a realtor I made educating and informing the buyer regarding the whole process from start to finish one of my first priorities. This is one of the biggest investments in a person’s life and can also be one of the most stressful. If they know what to expect, they are more confident about buying their home.
Here is what you can expect:
Earnest money deposit – This is like a down payment that you give at the time you write an offer. Once the offer is accepted it will be deposited into a non-interest bearing escrow account. If the offer does not get accepted you will get it back. If for some reason the contract falls through, depending on the circumstances, you may be able to get it back. Otherwise, you will get a credit for it at closing. The amount you decide to put down is your decision. However, keep in mind the more you put down the more attractive your offer is to the seller.
Application fee for mortgage – As soon as you have an accepted contract you need to apply for a mortgage if you have not already done so. The fee is approximately $ and is paid to the lender.
Home Inspection – As soon as you have an accepted contract you need to schedule a home inspection. Home inspection fees in this area vary from $225 - $300. You pay the inspector prior to or the day of the inspection. Please note that a home inspection is not required but I strongly recommend it!!
Termite Inspection – Most lenders in this area will require a termite inspection. I usually advise my buyers to hold off on this inspection until after the home inspection is complete. My reasoning is that if something big comes up on the home inspection and the contract falls through then the buyer hasn’t spent any more money than they had to. Termite inspections in this area range from $50 - $70. Depending on the lender, you will either pay the inspector prior to or the day of the inspection or the lender may allow you to include it with your fees due at closing. The one exception to this is if the financing is VA. VA will not allow the buyer to pay for the termite inspection.
Appraisal – Again, I usually advise my buyers to wait until after the home inspection, but it will need to be done within the first two weeks after the contract is accepted. It will depend on the lender whether you will pay this fee at the time of the mortgage application or with your fees due at closing. Plan on paying $300 - $400 for an appraisal.
City Inspection – A lot of people assume this is the seller’s responsibility; however, there is no where in the contract where it states this. I always advise my buyers to include this in their original offer. However, if you didn’t negotiate this with the seller and you do get stuck with the bill, the fee varies according to the municipality the property is located in. Generally between $25 - $75 and you pay this to the city before the inspection. Also, depending on the city, there may be a fee for re-inspection if the property did not pass the initial inspection.
1 yr Homeowners Insurance Policy – The lender requires a prepaid policy for one year on your home prior to closing. Sometimes the lender will allow you to include this with your fees due at closing. You will need to check with your insurance agent for the amount.
Closing Costs – These include the lender fees, title charges and government fees. When you apply for your loan, your lender will give you an estimate of the closing costs. You will need to bring a cashiers check to the closing.
******These figures are ESTIMATES ONLY. This is just to give you an idea of the costs which are commonly associated with buying a home. There may be other optional expenses such as a mold inspection, radon test, septic inspection, attorney fees. Your agent should explain these options to you.
Congratulations! You are now a proud homeowner! In this series we talked about some important things to know about buying a home. There is a whole lot more I could tell you. If you’re looking for a home in the Madison County area, give me a call. I would appreciate the opportunity to help you!
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For real estate help in the Bethalto, Wood River, Alton, Godfrey areas email Stacie at email@example.com