How Much Does It Cost To Buy A House?
Are you ready to buy a home but wonder how much you’re going to need to save? In this episode of Fresno Re.defined, I’m going to walk you through the costs you can expect when you purchase a property in Fresno County. We’ll look at the numbers of everything from your down payment to appraisal fees so you can best prepare your budget.
The Preapproval Process
Homes move pretty fast in our market, and it's very competitive. Thankfully, we can help you take the first steps so you're ready to start looking at homes. Part of being ready is understanding what amount you're pre-approved for and what your closing costs are going to be.
It's a good idea to start speaking to a lender early on in the process. This will allow you to get an idea of what kind of financing you're going to use, which in turn helps determine what price point you'll be looking at. You can then plan for how much you need to save or acquire from a gift—or get other assistance if needed. Our job is to help you get connected to a trusted lender.
Once you have spoken with the lender and you've started the pre-approval process by applying and submitting your documentation, it shouldn't take much time after that to know your next steps. The lender will simply review your documents and then let you know where you are in the process. After that, hopefully, you’ll be ready to go.
Your Good Faith Deposit
Once you’ve been preapproved, there are some costs you’ll need to be aware of. These are the costs that you're going to need to pay upfront within a few days of getting your offer accepted. The first cost is your good faith deposit.
In Fresno County, you'll typically need to save a minimum of 1% to 3% of the purchase price for your good faith deposit. This means that when you go into contract on a $400,000 home, you'll need to deposit at least $4,000 into escrow in the first three days after getting your offer accepted. Mind you, this amount does go towards your total down payment.
The Down Payment
The next thing you’ll need to pay is your down payment. Generally, you're going to need to save a minimum of 3% down for conventional financing and 3.5% down for an FHA loan. Of course, these are just two options you have; your lender is going to help guide you to the best loan program for you.
To illustrate the cost of your down payment, let’s look at an example. On a $400,000 purchase, you're going to need to save a minimum of $12,000 down with a 3% conventional loan.
Closing Costs And Inspections
Closing costs are your one-time lender title and escrow fees. Your prepaids are the recurring costs collected to set up an impound account for property tax insurance and PMI. Closing costs account for another 2% to 3% of your purchase price, which would be another approximate $8,000 to $12,000 in addition to your downpayment. The price will also depend on the loan program.
Another cost you'll assume shortly after you get an accepted offer on a property is inspection costs. These are incurred during your due diligence period, and we can help you schedule those as well. The first inspection you're going to want to do is a home inspection, which runs anywhere from $250 all the way up to $450 or $500. This cost depends on the size of the home, whether it has a pool, and other variables.
A pest inspection is also important; this generally runs anywhere from $75 to $125. For the same reasons, a roof inspection is another option and that usually runs about $100. While these are the most popular inspections, there are other inspections that your home inspector might recommend. Typically in Fresno, we do things a little differently than other counties in California. This is because we don't have the seller do those inspections upfront; rather, it's a buyer’s responsibility. Our process is just a little different than other areas in California.
The next upfront cost we want to talk to you about is your appraisal. This is an out-of-pocket cost on the lending side and is usually paid by a credit card—which is helpful. The cost can range from $500 on up, though appraisals have gone up recently. It all depends on the property type and the demand for appraisals.
Overall, it's important to understand the cost associated with buying a home and to talk with a lender and your agent before you start looking at homes. This way, they can help you put a game plan together.
Getting Into Your New Home
We hope this helps give you a better idea about the costs associated with a new home purchase. This isn't meant to scare you; rather, it's a realistic view of purchasing a home. The amount you’ll pay really depends upon your individual situation. The bottom line to remember is don't buy just because the market is hot; buy because you can afford to buy and because it makes sense.
If you would like help formulating a game plan, we would love to schedule a buyer consultation with you and connect you to one of our trusted lenders. You can also feel free to message us, call us, or send us an email to get in touch. Remember, even if you aren't looking to purchase in Fresno County, we're connected to top agents and lenders all over California and across the nation. We'd be more than happy to help you.
Make sure to also subscribe to our channel so you never miss an episode of Fresno Re.defined, our show all about Fresno and Clovis real estate, lifestyle, and living. You can check out some of our other videos, and be sure to stay tuned to see what we feature next!