What is the cost to buy a home? Everyone knows about the down payment, but what other costs are involved? San Diego Realtor Matt Huneycutt goes over the other payments you are going to need to make once going into escrow on a property.

What are the real costs to buy a home in San Diego?

You've probably heard of the down payment, but there are several other payments that you need to make once you get into escrow on a property.

1. The first thing that you need to plan for once you get into escrow on a property is an earnest money deposit. Typically, that's 1% of the purchase price of the property. It's an effort for good faith. You put the money in, it goes to the escrow company, and if you break the contract, that money goes to the seller. It's their collateral for you wasting their time and not holding up your end of the bargain. If you do everything right, and you close on that property, or if you back out of the contract using one of the several legal prescribed methods, you get your money back, so I call it “boomerang money”.

2. The next thing you'll need to be prepared for is closing costs. The down payment is a completely separate thing from closing costs. Though, closing costs have a few one-time fees built-in. You have to pay the escrow company to do their job, maybe the title company, maybe some lender fees, and some recording fees. Those amount to a few thousand dollars. The rest of your closing costs are actually prepaid items. So they're prepaid interest, prepaid taxes, prepaid insurance on your loan. That acts as a cushion for the lender in case you default down the road. That money sticks with the lender for the life of your loan. So think of that as “long-term boomerang money”.

3. The next thing you'll need to be prepared for is an appraisal. If you're getting a loan on a property, the lender is going to need an appraisal from a licensed appraiser to guarantee that the house is worth what you're offering for it. Again, if the bank has to go and foreclose on the house, they want to know that they're going after good money.

4. The last thing that you'll need is money for your home inspection. Now, a home inspection is voluntary, but we will not let you close on a home without getting a home inspection and not hearing about it from us. Home inspections usually costs somewhere between $300 and $600 and it's worth the money. Please do get that. That is due at the time of payment. So that's the one thing that you'll really need to have cash out-of-pocket for sure. Just about everything else can be handled inside your closing costs.

I know this may sound scary with all these fees adding up, but you've got lots of options. Feel free to contact us today to set up your personal buying plan. I'm Matt Honeycutt with the Whissel Realty Group. Thanks for watching

Reach out directly to Matt Huneycutt at 619-993-8144

San Diego Featured Listings

See More Listings

See More Listings