Home buying involves some upfront expenses. You need to pay some costs out of pocket once the seller has accepted your offer to buy. There are costs you need to settle at closing.
Following are the upfront and closing costs involved in getting a Utah housing loan in Ogden from institutions such as Wasatch Peaks Credit Union that you should be aware of.
You pay earnest money to the seller to prove that you are serious in your offer to buy the property. The amount depends on the preference of the seller and the current market conditions in the area. It ranges from 1%-3% of the price of the house.
They then deposit the money into an escrow amount, and will later cover part of your closing costs.
A down payment is an upfront cost and represents a percentage of the price of the property. When making an offer to buy, you need to specify the amount of down payment you intend to put up. The amount can change before closing if the seller agrees.
Usual down payment is 20% but may vary depending on market conditions, your credit rating, and the kind of loan you are taking.
Lenders ask for a home appraisal before giving their nod to the loan. This is to make sure that the offer matches the home’s actual value. The cost of the examination is around $300-$500.
Trained and licensed home inspectors perform the inspection. The purpose is to spot defects and potential problems not easily seen by inexperienced buyers during casual walk-throughs.
The property owner pays the property taxes upfront in monthly installments. You need to reimburse the seller for the taxes paid from the date of closing to the end of the tax period.
First Year Homeowner’s Insurance
Before closing, your lender will ask for proof of homeowner’s insurance. You need to pay for the initial year upfront. The cost varies, depending on several factors including the home’s value, location, contents, your credit score, coverage limits, and policy deductible.
These are some of the upfront and closing costs that you need to prepare for. Other fees may be bundled at closing.