What are the real costs of buying a Seattle home?
It pays to be prepared. That means knowing how much buying a home in Seattle is really going to cost you once you get to the closing table.
Unfortunately, most home buyers aren’t savvy about the real costs of homeownership. No one likes to be surprised by extra costs. The last thing anyone wants is to have to stretch even further with more money out of pocket at the last minute. It’s even worse if you’re stuck with ongoing monthly costs that are way above your budget.
Buying a home in Seattle is still a great move. It certainly beats renting, and has proven to have many long term benefits. The key to success and happiness in your home purchase is knowing the real costs upfront and being able to budget appropriately.
Here’s what you need to know before you sign that contact…
The Purchase Price
This one is pretty obvious. It’s the ticket price for the home. Just make sure you are also paying attention to the terms of your contract. Depending on which boxes are checked you may be paying for all of the following expenses too. Or you can request they are included, and finance many of them in.c
Some people love to complain about Realtors’ commissions. Others see it as a fair price for a valuable service. They can definitely create a more efficient process and help protect you from liability. The seller typically pays the real estate agent commissions. They often pay the same, whether or not you have your own agent. So, if you are paying for it anyway, it makes sense to use the help. Just remember that virtually everything is negotiable, and you can at least ask for a discount or a rebate to help cover these other costs. Realtor.com says the average commission is still 5-6% of the purchase price.
There are several additional costs which are often mistakenly thought to be finance costs, but are actually independent third party costs. A good Seattle mortgage lender will make sure you are aware of these costs upfront. When comparing loans make sure you are separating these from what the lender is actually charging. Otherwise one Washington mortgage company might look like they are giving you a better deal, when they are really just low balling the estimates on these costs or not even including them to make their offer look better.
Never, ever buy a home without a title and lien search. Not even if you are paying all cash. A title company or real estate attorney can do this for you. This will usually be the same company which is handling your real estate closing. A title search reveals any debts on the property which need to be paid off, as well as who the real legal owners are, and what you are really getting. Without this, you might just be buying a massive debt that is bigger than the home is worth, or may have no guarantee that you have any legal rights of ownership. These searches are very inexpensive and can be paid at closing.
Even if it isn’t mandatory, always get a home inspections when buying a Seattle home. It doesn’t matter if it is 80 years old, brand new construction, a single family home or a condo. Get it inspected. You just want to know if there are any urgent repair issues that will require extra money right away. In most cases, hopefully, there will just be a few nice-to-have upgrades that you can deal with over time when you have extra cash. Ask your inspector to point out the differences for you. Inspection fees are usually just a few hundred dollars and are paid directly to the inspector.
Whether or not they are mandatory, you still want to be covered by insurance. You’ll want title insurance and general homeowners insurance to cover things like fire and break-ins. As a part of this process you will probably also need a survey and flood cert. Most of these costs can be paid at the closing. Be sure to ask your insurance agent about potential discounts. You may qualify for multi-policy discounts or better rates for having a security system.
If you are financing your home purchase, then your lender will have some costs as well. These can be spread across the interest rate, points, underwriting fees, and processing fees. Of course, you want your loan underwritten and processed. While this can be confusing, your lending estimate will sum these up as an APR. Use this APR number to compare home loan options and see which really gives you the lower cost of credit. Your Seattle mortgage broker can also help you balance out the best rates and costs for paying less now, or maintaining a lower rate and payment over the life of your loan.
There will be costs of closing on your transaction whether or not you finance your new home. These can include notary, doc prep, wire transfer and recording fees. These are the costs for the title company or attorney’s office to transfer the money, prepare the documents, and make sure they are legally filed and protect your interest as the new owner. The closing agent may also collect a partial month of interest, and prorations for property taxes and insurance premiums or HOA debits and credits at this time as well.
Don’t forget the cost to move. Maybe you only have a backpack that you can fit into the back of an Uber, and you’ll be all moved in for less than $100. Or you may have a whole house of furniture to move, and be moving in from out of state. Get quotes as early as you can. The Seattle Times says for local moves you should expect to pay an hourly rate, multiplied by the number of laborers needed. Allow a little cushion in your budget just in case you need to put some things in storage for a month or need to stay in a hotel for a few days in between closings.
Know the real costs of buying a Seattle home, and make budget decisions that will ensure a happy closing and long term enjoyment of your new house. You want to sleep easy and wake up excited in your new space. Make sure you are counting these costs. Altogether home buyers can expect their closing costs to range from around 2% to 4% of the purchase price. Ask your loan officer for an estimate and they’ll be happy to walk you through each item so you understand what it’s for, and how to save the most.