Have you been considering buying a home this year, but you're not really quite sure what your out of pocket expenses will be?

Hey, this is Adrian with the Goss Group here at eXp Realty and today we're going to be talking about five out of pocket expenses is that you'll have when buying a home. So let's get right into it. We're not going to be talking about loan programs. We're not going to be talking about monthly costs with your mortgage or anything like that. But these are really things that are going to be out of pocket from you. When you go to buy your first home or whatever home you're buying.

So first thing you're going to have is your down payment. So we're not going to be talking about different loan programs in this video. We will talk about that on another video, but essentially whatever your down payment will be, that will be an out of pocket expense for you. Whether that's three and a half percent down FHA, 5% down, 10% down, 20% down. Whatever loan program you go with, that will be what your down payment is. And that's typically collected at the end of the transaction. When you go to bring your check to the title company, that's kind of one of the last steps in the process. You give your down payment at the end of the transaction.

At the beginning of the transaction you're going to have your out of pocket expense number two, which is going to be your EMD also known as an earnest money deposit. And this is really kind of like a good faith estimate. Typically, we see in our area it's normally about 1% of the sales price. So if you're doing a $500,000 purchase, typically your deposit's going to be somewhere around five to $10,000. We're seeing one to 2% most the time in our current market.

And what's cool about the deposit is that will actually go towards your down payment at the end of the transaction. So let's say you have $25,000 for your down payment and you do a $5,000 deposit. You would have roughly $20,000 to bring at the end of the transaction. And then that's going to take us into our third cost, which is going to be closing costs. So down payment is not going to be your only expense when you're buying a home. You're going to have what's called closing costs and that's typically fees and basically your lender fees.

So assuming you're getting a loan on the home, you will have somewhere between, I like to calculate normally 3% for closing costs. So if you're doing a $400,000 loan, you're going to have roughly $12,000 in fees. And that's really just to pay your lender and mortgage fees and stuff like that. So this is going to depend on which lender you go with. Closing costs can range anywhere are from two to about 5%, but I like to use 3% on average. That's going to take us into our fourth expense, which is going to be a home appraisal.

So again, assuming you're getting a loan, the lender wants to make sure that you're not overpaying for the home and they want to make sure if for whatever reason you stop making your payment, that they're not stuck with a home that is overvalued. So that appraisal can range depending on what kind of home you are purchasing, typically we are seeing right now between $500 and $750 and that is a cost to the buyer. So something that you will want to account for and that appraisal really is going to help you make sure to know that whatever you're buying is actually worth what you're paying for it.

And then the last thing that we're going to talk about, which is our fifth cost is going to be a home inspection. So we always recommend to get a reputable home inspector. I like to recommend three different types of in inspections. I like to use a general home inspector, I like to get a roof inspection and I also like to get a termite inspection. And then if there's a home with a pool, I always recommend getting that because pool equipment can be very costly.

So if you are considering buying a home and you do need referrals for reputable home inspectors, roof inspectors and termite and pest inspectors, we'd love to get you in touch with them to make sure that you're buying a great home. And certainly if you have been thinking about buying a home this year, we'd love to chat with you. You can reach me at 209-226-3096 or you can reach me at gossgroupca.com. Thanks so much. I hope you liked this video.