When buying a home, there's really no such thing as no money down. Even if you're going with a lender or a home loan like a USDA that allows for zero money down, not having any money for out-of-pocket costs is usually not a wise idea, so homebuyers will need a little bit of liquid cash when buying a property. Closing costs, down payment, earnest money checks, and inspection costs are usually out-of-pocket but when are all these due?
Buying a home is typically done in stages; you make an offer on a home, complete the inspection, and it closing handover a lump sum of money if that's the loan you're choosing. So what are these out-of-pocket costs and when are they do.
This is the initial good face the deposit that you submit when making an offer. It's typically between $500 and 3% of the purchase price of the property, however, it doesn't get deposited until the seller accepts the offer. This can be in the form of a personal check, cashier's check, or money order and will go towards the purchase price of the home at closing. Buyers will get this money credited to them as part of the buying process.
The inspector will typically need to be paid out-of-pocket at the time of inspection. It's important to meet with the inspector at the property and when the inspection is complete hand over payment. This can be anywhere from $300-$800 depending on the type of inspection and location.
Closing costs are the expenses related to making the loan and closing the purchase from escrow. This could include a variety of fees such as attorneys fees, title costs, surveys, transfer and courier fees, loan origination fees, document preparation fees, title insurance, and appraisals. These fees are typically between two and 5% of the purchase price and they are due when you sign your final loan documents. You can either bring a check to closing or wire the funds to escrow. Depending on the loan, these can be built into the purchase price of the home or the seller can pay these fees.
This is the amount of the purchase price that a buyer pays for that is not finance in a mortgage loan. Depending on the home loan, the buyer either brings nothing to the table, 3%, 3.5%, 10%, 20%, or higher depending on how much they are putting towards the property. The remainder is typically financed. Again, it depends on the type of loan to determine the down payment. These fees are due at closing as well.
So, the initial fees to purchasing a house may not be that much but it closing, fees need either be structured into the payment plan or clearly marked out so the buyer knows exactly what to bring to the table.