Risk Money & Cost To Close
When you buy a home, not only are you paying a “Purchase Price” but you are also going to be paying upfront money referred to as “Risk Money”.
”Risk Money” is what you spend before you own the home (non-refundable-hence Risk) in order to make sure the home you are buying is worth the Price Tag you’ve agreed to pay. And, depending on how your contract of sale has been written up, you may have negotiated a period of time to investigate issues of concern which may not have been apparent to you when you first viewed the home. Often I am asked what these fees and costs are. I did a little research based on an average sized (1500 SF), 3 bedroom home in the NH/ME Seacoast areas, and what follows are some examples of fees that a buyer may encounter as "RISK" money.
Risk Money - (FEES vary- These are examples for an average (1500 sf) sized 3 bedroom Single Family Home in the Southern NH/Southern Maine areas)
Septic Inspection/Pumping Estimate $275 to $500
Well Water Testing *$75-$100
Pest Inspection: ** $50.00 - $175
Hazardous Waste - Varies greatly depending on what you are investigating
There may be other conditions with the property you are considering that may require some other type of Inspection not listed here.
*If you have a General Home Inspection some of these companies also provide testing at an additional cost. Listed here are specific testing estimates.
**If you have a General Home Inspection - the licensed Inspector will do a visual for Pests/Mold and if they see evidence of active infestation will recommend further investigation. The estimates above are for specific inspections should you not have a General Home Inspection or have been advised to seek further advice. As a consumer you are not obligated to use any one particular vendor and are free to use whomever you prefer as long as they are professionals who are engaged in that particular service on a full time basis).
Cost To Close -Beyond Risk Money
After Inspections and assuming you and the seller have agreed to move forward with the transaction, there are Closing Costs associated with the actual closing of your transaction and apply whether paying CASH or financing. These are summarized below and are due at Closing (unless noted otherwise). Again, prices may vary, and depending on where you live in the country who pays what may differ. These are NH/ME examples and may in part be based on either the price of the home (in the case of Tax Stamps) or size of the home (in the case of Appraisal and Home owners insurance) or on an item or service fee basis.
Appraisal Fee- Paid at time of Service - $400-$500 (Optional for Cash buyer)
Home Owners Insurance -(Optional for Cash buyer)
Home Warranty Insurance - (Optional) $399-$599 covers major systems/appliances in the home
Tax Stamps (NH $15.00/per thousand of purchase price) in Maine it’s $5.00/Per thousand (split between buyer and Seller - Paid at closing)
Proration of property Taxes - Pro-rated at time of closing &
depends on whether or not the current seller has paid them
Proration of fuel in tanks (propane or oil)-Based on current
prices at time of measurement
Financing? If you are financing a home there are also costs associated with getting your
loan. But before you even start looking at homes you’ll want to talk to a
“local” Bank, Mortgage Company or Credit Union and get Pre-Approved. When
you make formal application, the lender will provide you with a Loan Estimate which will spell out the cost of
obtaining your loan and how much money you will need to bring to the closing
table - in addition to the purchase price. Within 3 days of Closing you
will receive a Closing Disclosure from your lender which spells out all
the final fees and how much to bring to closing.
Lender Fees (Sample—Fees Vary by Loan)
Origination Charge to the
Lender (is a flat fee range $750-$1500 (process, underwrite, doc prep, disclosed on Loan Estimate and Closing Disclosure)
Discount Points - Are a % of the Loan Amount to discount the Note rate, and can be negative points (lender paid fees)
Discount Points - Are a % of the Loan Amount to discount the Note rate, and can be negative points (lender paid fees)
Appraisal Fee (see Risk Money above $400-$500)
Credit Report $15.00-$29.00
Flood Certification $10.00
Recording of the mortgage (if financed) ($118.00 est - based on
number of pages)
Prepaid Interest on the loan (varies and is based on when you close)
Other Loan Charges
Pro-ration of property taxes (see costs to close above)
Homeowners Insurance (see costs to close above)
Closing Costs and Lender Fees will be due on the day of
Closing and in the form of a Bank Certified Check.
It is highly recommended that you speak
with a Local Lender even if you have already been pre-qualified with someone
else. Most all lenders have different types of programs that you may be qualified for. You may work with whomever you
choose. The links below are
local, experienced licensed Lenders who provide a multitude of programs.
Below is a list of service providers from which estimates used in this post were obtained—fees vary and as previously mentioned -consumers may use whomever they wish as long as those professionals are engaged in that line of business on a full time basis. Other service provides may be found online or through personal recommendation. Additionally, this information is local to the NH/ME seacoast areas.
http://www.consumerfinance.gov/owning-a-home/ - This is an Excellent source for “Know Before You Owe” Tips
The estimates above are based on an average (1500 sf) 3 bedroom home in NH/ME Seacoast area. Always check with a service provider for their individual costs based on your needs. Additionally, Closing Costs and who pays what may vary depending on where you live in the country.
No comments:
Post a Comment