So you know you need to save for a down payment and that there are some other costs associated with homebuying. Do you know what they are or what the cost might be? If not, read on for a crash course in buyer closings costs. Already sick of reading? Watch the video here
Inspection: Once you go under contract, bring out a licensed inspector and make sure the home is in good standing and to your liking. Inspection costs vary depending on size/location/inspector, but shouldn't set you back much more than $500. If the inspector finds problems that make you uncomfortable moving forward you should still be able to walk away from the deal but the inspector would still get his fee for performing the service.
Lender fees: Most lenders charge an origination fee which again vary, I see most around $1,000. They also require an appraisal to make sure their not securing a note for more then the property is worth. Appraisal costs are usually a few hundred.
Attorney fee: In Illinois a real estate attorney will represent you as a buyer and help with title work. Alike just about all these cost, it varies on attorney and the level of service they provide. Anticipate anywhere from $400-700. This cost is paid for at time of closing.
Title and closing fees: Document preparation and title work aren't cheap these days. Depending on the title company it can run you a few grand or more.
Transfer Tax: Depending on the city that you reside there is a tax for transferring property (on both the buy and sell side). In Chicago, it's .00075 of the purchase price, or $7.50 for every $1,000. So if you purchase a $250,000 home you will need about $1900 at closing. A $500,000 home puts this closer to $3800.
These costs add up. Sometimes they can be offset, either indirectly or intentionally. Ask me how.