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Costs of Buying

From Start to Finish

Down Payment

This is the amount of cash the buyer pays at closing toward the cost of the home.  Unless you are using a VA or USDA loan, you will be required to make a down payment.  Think of it as “A + B = C”.  The Down Payment, plus the amount of your loan, equals the purchase price. The Down Payment amount that is required will depend on the type of loan you are using and can range from anywhere from 3% – 20% of the purchase price. There is no maximum, so you can put down as much as you like! For an amount less than 20%, you will have a mortgage insurance premium calculated into your monthly payment. Down Payments are paid at closing, via cashier’s check or wire transfer, along with any closing costs you may have. 

Option Money

Option Money is a small amount of money that you pay to the seller to have the option to evaluate the home within an agreed time frame. During that time, if you are not satisfied with the home, you have the option to terminate the contract with no penalties, aside from the loss of the option fee. This Option Period is the time when you will want to have your inspection completed and negotiate any repairs. Option money is typically anywhere from $100-250. If you move forward with the purchase, this amount is credited back to you.

Earnest Money

Earnest Money is an upfront deposit that later gets applied to your down payment or closing costs. It lets the seller know you are serious about purchasing the home.  This money will be sent to the title company and they hold it in an escrow account during the transaction.  The usual amount of earnest money is 1-2% of the purchase price.  If you default on the contract, the earnest money could be awarded to the sellers.  I will keep you well-informed of your contract obligations and dates so you won’t put yourself in that position.


If you are using a loan, an appraisal will be required. Usually your lender will order the appraisal from a third party and you will be asked to pay for the appraisal service at the time it is ordered.  The purpose of the appraisal is to protect you (and the lender), to be sure the home is valued at or above the purchase price.  If it does not appraise for the contract price, you will need to be prepared to negotiate the difference with the seller in order to have the loan approved.  The appraisal fee will likely be between $400-$700.

Closing Costs

Closing costs can include escrow fees, attorney fees, possible survey fees, lender fees, document preparation fees, including title-related fees.  These are paid at closing by Cashier’s check or Wire Transfer, along with any down payment funds.


A home inspection will take a few hours and can cost $500 or more, depending on the size of home, and extra features such as septic system or pool. This is important because it will give you a lot of helpful information about the systems in the home, as well as the condition of the interior and exterior. The inspector will send the report to you and I to review, and if needed we can then make repair requests to the seller with an amendment to the contract.

**Bold Italicized text are items that are paid for at closing.  Bold text are items that are paid during the contract process