Buying a home is an exciting milestone, but understanding the costs involved can feel overwhelming. At Liberty Star Mortgage in Fulshear, Texas, we’re here to break it down and help you plan your budget effectively. Here are answers to some of the most common budget questions when purchasing a home.

What Costs Should You Expect Before Closing?

Many first-time buyers assume the only expense to prepare for is the down payment, due at closing. However, there are several costs to budget for before that day arrives:

1. Earnest Money Deposit
   Earnest money is a deposit that shows you’re serious about purchasing the home. While negotiable, this is typically 1%–2% of the home’s sales price and is paid when you write the contract.
2. Option Fee
   The option fee gives you the right to walk away from the contract within a negotiated timeframe for any reason. Like earnest money, this fee is also paid at the time of the contract.
3. Home Inspection
   After your offer is accepted, you’ll need to schedule a home inspection. This ensures the property is in good condition and helps identify potential repairs. Home inspections generally cost $400–$1,000, depending on the size of the home and the type of inspections required.
4. Appraisal Fee
   Once inspections and repair negotiations are complete, your loan officer will order an appraisal to determine the home’s value. You’ll pay this fee directly to the appraisal company, typically weeks before closing.

What Costs Are Due at Closing?

When closing day arrives, you’ll need to bring funds to cover these major expenses:

1. Down Payment
   Your down payment is due at the closing table. You’ll either wire the funds or bring a cashier’s check to cover this cost.
2. Closing Costs and Prepaid Items
   In addition to the down payment, closing costs include lender fees, title services, and prepaid items like property taxes and homeowners insurance. Your chosen insurance company will send an invoice, which is paid at closing as part of your total costs.

Budgeting Pro Tips

• Be Prepared Early: Having a budget for upfront costs like earnest money, option fees, and inspections will prevent surprises during the process.
• Ask Questions: Work closely with your loan officer and real estate agent to understand all potential costs.
• Keep Extra Funds Ready: It’s always a good idea to have a financial cushion for unexpected expenses.

Understanding the costs at each step will make the process smoother and less stressful. With a solid plan, you’ll be one step closer to achieving your dream of homeownership!

Liberty Star Mortgage – Guiding You Home

Buying a home doesn’t have to feel overwhelming. With the right guidance and preparation, you’ll feel confident every step of the way.