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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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