EXPENSES INVOLVED IN
BUYING A HOME
Here’s a summary of some of the items you can expect during your escrow
process and the approximate cost to you when buying a new home in the Tucson
area.
1. Earnest money
Don’t confuse this with “down payment”. When you submit your offer to the
seller, you’ll be asked to make a good faith offer that shows the seller that
you’re a serious buyer. There isn’t a set amount, but often 1-3% of the
price of the home is a fair estimate. If your offer is accepted, your
check will be deposited into an escrow account by a third party – an escrow
company. This money will be applied towards the purchase of your home.
You can specify to have it credited towards your down payment, if you
wish. If your offer is not accepted, your check will be returned.
2. Home Inspection
As an agent, I recommend you ALWAYS have a qualified home inspection completed.
I am happy to recommend several trusted professionals. The inspector
checks your home from top to bottom and informs you of what items are NOT
covered by the inspection. If there are any additional concerns, your
home inspector will recommend FURTHER inspection – such as mold, roof,
structural engineer, etc. You will receive a written report, as well as a
visual walk through upon completion of the inspection. An inspection can
cost you approximately $250 to $500 depending on age and size of the
home. Sometimes this fee can be paid out of COE, or closing costs when
you sign for your home.
3. Termite Inspection
There’s a quote in Tucson. “Your home either HAS termites, or WILL HAVE
termites.” ALWAYS get an inspection. If it is a newer home, the
presence of termites may be covered under the builder warranty. Often, a
lender will not fund a home without termite resolution. You will receive a
written report. The cost of an inspection can run $40-$75. Again,
sometimes this fee can be paid out of COE.
4. Miscellaneous Inspections
When you are buying a new home in Tucson, or anywhere, you are put into a
“buyer beware” situation. Your agent will give you a list of buyer
advisories to help you in your process. It is up to you to check out any
conditions of importance to you. Your agent will secure the SPDS and CLUE
report, if available per the contract. (Seller’s Property Disclosure Report and
insurance claims history) Some of the possible issues to inspect would
be: Radon, septic, lead based paint, mold, Chinese drywall, foundation,
asbestos, and more. The price for each inspection can greatly vary, but
it is best to discuss the necessity of such with your agent. Your agent
can help you to locate qualified professionals.
5. Appraisal
If you are obtaining a loan to purchase the property, your lender will require
an appraisal. This fee is generally paid at the time it is ordered.
You can expect to pay $350 to $600 depending upon the type of loan, and the
property involved. Your lender can explain this to you in detail during
your pre-authorization process.
6. Utility Deposits
If you are a first time home buyer and have never
had service in your name, you may be required to pay a deposit to the
utility companies. Also, if you are purchasing a SHORT SALE or REO property without utilities, an inspection to
re-connect may be required. You may have to have to “de-winterize” . There may be
connection fees. You will be required to have the utilities on for the
inspection and appraisal
unless you are paying cash. Deposit amounts can vary according to the
Utility provider.
7. Homeowners Insurance
Don’t forget to talk to your insurance agent! Often times, your first year of homeowner’s
insurance will be pre-paid prior to closing. These fees will come at COE
and can be handled directly between you and your insurance company directly, if
desired. The cost of the insurance depends on your claim history, your
carrier, your credit, the amount of insurance requested, liability, type and
size of the property, construction, location, and many other factors.
Talking with your insurance provider ahead of time will be helpful in making
your final decision in purchasing a home.
8. Closing costs
There are a number of other costs that you will receive a good faith estimate from
your bank, and HUD-1 from escrow. They tend to be lumped into “closing
costs”. Some of these items are impounds and fees, loan origination fees,
escrow fees, drafting fees, etc. When you receive these forms, it is good to go
over them with your agent or the provider who issued the document.
Please contact me if you have any questions about possible expenses when purchasing your new home in Tucson, Marana, Oro Valley or Vail!
