What to Know Before You Buy a Home in Austin

Purchasing a home in Austin involves several fees, both upfront and ongoing. Below is an overview of the most common expenses homebuyers should anticipate:

Upfront Costs

Earnest Money: Usually 1% of the purchase price ($4,500 for a $450,000 home), credited back at closing.
Option Money: $50-$100 per day for 3-7 days to secure the home while conducting inspections; credited back at closing unless the contract is terminated.
Home Inspection: Costs $300-$800, based on home size.
Property Appraisal: Lender required and costs $450-$1000, based on property size.
Down Payment: Typically 3.5% to 30% of the home price, though some loans allow for 0% down. For a $500,000 home, this could range from $25,000 to $150,000. Your previously paid Option and Earnest Deposits will be credited at closing and go towards your closing costs/down payment.
Closing Costs: Generally 2% to 5% of the purchase price, covering loan processing, title fees, and other administrative expenses. This includes setting up your mortgage escrow account (property taxes and insurance).
Moving Expenses: Can range from a few hundred to over $15,000, depending on distance, amount of belongings, and how involved you want the movers.

Mortgage Fees

Loan Origination Fee: Largest mortgage-related fee, covering lender’s processing costs.
Discount Points: Optional fees to lower the interest rate. Temporary rate buy downs COULD be negotiated for the seller to pay on your behalf. More info on rate buy downs here.
Application & Credit Report Fees: Charges for processing and credit verification.
Property Appraisal: Ensures the home value aligns with the loan amount; cost passed to the buyer.
Private Mortgage Insurance (PMI): Required if the down payment is below 20%, charged monthly.
Property Survey: May be required to verify property details.
To see today’s most accurate mortgage interest rate, go here.
To play around with different numbers and see how that impacts your monthly payment, go here.

Title Company Fees

Title Insurance & Search Fees: Protect against title disputes.
Recording Fees: Costs to file the deed with the county.
Escrow Fees: Covers title company services in handling the transaction.

Ongoing Homeownership Costs

Homeowner’s Insurance: Estimated at $1,000+ per year.
Property Taxes: 1% to 3.8% in Austin and surrounding areas. 2% to 2.4% is common. Continuously increasing, based on the home’s assessed value.
HOA Fees: Range from $100 to $700 monthly, depending on the neighborhood and amenities.
Maintenance & Repairs: Covers unexpected expenses like HVAC maintenance, plumbing, and appliance replacements.
Utilities & Lawn Care: Varies by home size and location, with some areas having high water or propane costs.

Additional Considerations

Inspections: Additional inspections (e.g., mold, termite, structural) may be required.

Conclusion

Homeownership in Austin can be a great investment. Buyers should plan for the various fees and expenses beyond the listing price. Consulting with a local mortgage lender and partnering with a professional real estate agent can help you better understand specific cost estimates and potential savings strategies.

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Austin, TX 78746

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