Buying a home is exciting, but there are some upfront costs associated with the home purchase process. These are some of the expenses that must be paid in advance when applying for a purchase mortgage loan:
Home Appraisal
Before a lender gives a loan, they will order an appraisal to confirm the home’s value matches the amount borrowed.
- Appraisals typically cost $500–$800, depending on the property.
- This is typically paid upfront before the appraisal is complete.
Home Inspection
Even though it’s not required by the lender, it’s smart to hire a home inspector to check for any hidden issues with the property.
- Expect to pay around $300–$600.
- This helps avoid costly surprises later, such as roof leaks, plumbing issues, or foundation problems.
HOA Questionnaire/Certification
If you are purchasing a Condo, you will need to pay for an HOA Certification. The seller pays for the bulk of the HOA documents, but if you are getting a mortgage, you will need to pay for an HOA Questionnaire that underwriting will require to certify and approve the HOA:
- Expect to pay around $200
- HOAs can take a week to about a week to deliver the completed Questionnaire
Credit Report
Some lenders may charge small fees to check credit. Lenders often collect these fees at closing, rather than up front, as a courtesy or incentive to attract new borrowers or make their loan offers more appealing.
Verification of Employment
Some companies charge third-party fees in order to obtain verifications of employment. These can be needed upfront during either the pre-approval process or just shortly prior to closing.
Once you are ready to close, you will then have to wire in your cash to close, including your down payment, ranging from 0% to 20%, depending on your loan program, and remaining Closing Costs.
The Bottom Line
When buying a home, it’s not just about saving for the down payment—there are other costs that add up along the way. Understanding these upfront expenses helps buyers budget and ensures a smoother process from offer to closing.
If you have further questions, please contact our office at (760) 930-0569 to speak with one of our Mortgage Loan Originators.
