When buying a home, many people assume the only money they need upfront is their down payment. In reality, there are several other costs that come up throughout the process. Understanding these fees, when they are due, and how to prepare for them will help you avoid surprises.
Earnest money:
In NW Montana, buyers make one earnest money payment. The amount and due date are outlined in the Buy-Sell Agreement and can vary. Typically, 1% of the purchase price is a fairly standard amount and is usually due within three to five days of going under contract. Earnest money is paid directly to the title company and is applied toward your down payment at closing.
Appraisal:
Appraisals in this area typically cost between $750 and $1500 dollars and are paid to the lender by credit card shortly after going under contract.
General inspections:
A general home inspection is always recommended. These inspections usually cost between $450 and $900 dollars depending on the size of the property and are paid on the day of the inspection.
Supplemental inspections:
Depending on the property, additional inspections may be recommended. Some can be done on the same day as the general inspection, while others require a separate appointment that must be completed before your Inspection Notice Deadline.
Sewer scope:
If there is access to the sewer line, a sewer scope can help identify blockages or damage. Costs range from $150 to $500 dollars.
Radon:
Radon testing involves placing a machine in the home for at least 48 hours. The typical cost in northwest Montana is $125 to $175 dollars.
Chimney:
Older homes with chimneys should be scanned to check for debris, liner issues, or structural concerns. Expect to pay $100 to $200 dollars.
Moisture or basement evaluation:
If the home has a basement or the inspector detects high moisture readings, a waterproofing company may need to evaluate the space. Some companies do this at no charge, but others may charge a small fee.
This is not a complete list of supplemental inspections, but these are the most common. Depending on the home, you may also want roofers, painters, HVAC technicians, flooring specialists, landscapers, lead paint experts, asbestos professionals, mold testers, or other contractors to provide estimates. Some companies charge small measurement or quote fees that are credited back if you hire them. I can recommend trusted vendors and help coordinate these appointments if needed.
Closing costs and prepaids:
Most of the fees above are paid before closing. At closing, you will also pay closing costs and prepaids in addition to your down payment. Closing costs are usually 2 to 3 percent of the purchase price and include items such as title fees, transfer taxes, lender fees, and the appraisal. Your lender can provide an estimate.
If you are getting a loan, you will also pay prepaids. These include several months of homeowner’s insurance, taxes, and, if applicable, several months of HOA dues. Your lender will give you a full estimate of both closing costs and prepaids so you know exactly how much to budget on top of your down payment, earnest money, and inspection fees.
If you have questions about how much money you will need to buy a home, please reach out to us or your lender.
