Article | 2:18 min read

Be Prepared for These (Sometimes) Unexpected Costs at Closing


Buying a home is a very exciting time! Along with the excitement and home buying vibes, it’s important to make sure you’re financially prepared. There’s more to consider than just the down payment. As you complete your purchase, make sure you keep these upcoming costs in mind.

A couple talking with a mortgage loan officer

1. Appraisal

Before the purchase, your lender will require an appraisal. This appraisal is normally ordered by the lender; however, (in most cases) the appraisal fee will be paid by the purchaser. The appraisal makes sure the home is priced correctly for any recent updates and market conditions. The appraisal fees will vary by market and company, but you'll want to budget anywhere from $400 to $600.

2. Home Inspection

Where you might not think you need a home inspection, especially for new construction, it's always a good idea to get someone into the home to make sure there are no major issues. Home inspectors will find things that might not be obvious to a potential buyer, such as foundation, electrical, and plumbing issues. The inspection may also give you some wiggle room for contact negotiation. In most cases, home contracts will include a clause based on the results of the inspection, allowing you to walk away from the purchase or requiring the seller to fix any areas needing attention. The home inspection can be anywhere from $200 to $300. Depending on where the home is located and the age of the home, you may want to complete additional inspections, such as foundation or radon testing.

3. Pest Inspections

If you're purchasing a lived-in home, it's best to get a pest professional to inspect the property. They will look for signs of pests and termites both inside and outside the home. A professional knows what to look for and will be able to spot signs of pests in greater detail. This inspection is not always required, however, is normally in the best interest of the buyers. A pest inspection can cost anywhere from $50 - $150.

4. Closing Costs

This cost can be expected in every home purchase; however, based on the sale price and contract, can be vastly different. The closing costs can include any real estate commissions and title work for the sale. The best way to be prepared for this cost is to closely review the loan estimate and closing disclosure with your lender in advance. This way you're not surprised by any costs in the final week of the purchase.

5. Escrow Funding

Your escrow account is made up of your homeowner's insurance and property tax, as well as private mortgage insurance (PMI), flood insurance, and HOA dues if applicable. You can expect to pay your first-year premium of your home insurance, and set up reserves for your homeowner's insurance and property taxes. You will also need to set up reserves for any other items that are being escrowed. If you have any specific questions leading up to your closing, it's best to sit down with your lender to make sure you're prepared for the big day!


The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its subsidiaries and does not imply endorsement or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.