The number one question amongst new and returning home buyers alike is “How much money do I really need upfront to buy a house?” It is an enormous worry and source of confusion. When they speak to a lender, they hear about mortgage down payment amounts and some loan related closing costs. But what about the rest? Trust me, there is so much more than just that!
PART 1: Immediate Liquid Funds
In order to buy a home in a popular area and a competitive market, you need approximately $23k**… right now… available to make out the checks… in order to compete in a hot market! Read below to find out how this is broken down. **(Please keep in mind that I am speaking specifically about the Triangle area of North Carolina during a very competitive time.) Due Diligence Fee & Earnest Money Deposit You don’t need to write out any checks when you submit an offer, but you better be ready to write out and deliver the Due Diligence Fee and Earnest Money deposits as soon as your offer is accepted! Depending on where you are in NC, this can vary between $2k – $10k – $20k++. Best to plan on the higher side if you are thinking of buying a home in a popular area during a competitive market.
- (In case you missed it from my previous blog posts, North Carolina has two different deposits. You can read more about them here.)
- (Wondering if a Due Diligence Fee is even necessary? Read this blog post to find out!)
Inspections, Surveys & Appraisal These fees are required at the time of service and cannot be rolled into your closing costs. You need to have these funds liquid in order to move forward with the services:
- Inspection = approx $700 – $1000+ (with radon and termite included – cost depends on size of home)
- Appraisal = approx $650 – $1000
- Property/Land Survey = approx $800 – $1000+ (optional but I believe this is necessary)
PART 2: Rolled Into Closing Costs
There are certain costs that can be paid at closing. You will wire one lump sum to the attorney to cover the balance of your mortgage, lender fees/cost and the items below. Legal Fees, Etc These fees will be rolled into your closing costs:
- Attorney fee = approximately $1000
- Lender Title Insurance (this is not homeowners insurance) = approx $450 – $650+
- Owner’s Title Insurance (this is not homeowners insurance)= approx $300 – $1000+
- Recording Fee = approx $100 – $150
Prorated Costs, etc. Property taxes, HOA and homeowners insurance can be rolled into your closing costs. Since these are home cost specific, there are no approximate dollar amounts listed:
- Prorated Property Taxes – you pay day of closing through end of year
- Also an additional 3 months of Property Taxes for escrow account
- Prorated HOA – you would pay day of closing through end of month and they collect approx 3 months of payment up front
- HOA one time capital contribution = between $150-$350+ (varies by HOA)
- Homeowners Insurance (full year payment collected at closing)
Summary The bottom line is that if you want to buy a house in the Triangle area of North Carolina during a competitive market, you must have enough liquid funds available to pay for the following up front:
- Due Diligence Fee
- Earnest Money Deposit
- Home Inspections
- Appraisal
- Property/Land Survey
I’m not saying you must have $23k for every home in the area, but it’s best for you to understand what to potentially expect. If you want more information about closing costs or the home buying process, please set a time for us to chat so I can help you further.
Learn More…
Click here to learn more about the Due Diligence Fee.
Click here to learn more about the Earnest Money Deposit.
Click here to learn more about the benefits of having a buyer’s agent.
Click here to learn more about the benefits of having a seller’s agent.
