Page 11 - Butterfly Realty LLC

At this point there are 3 expenses that will be due within the next 1 to 14 days
and expenses you will need for closing day:

• Earnest Money (about 1-3 days of binding contract)- or good faith deposit, is a sum of
money you put down to demonstrate your seriousness about buying a home. In most cases,
earnest money acts as a deposit on the property you're looking to buy. This is typically a
negotiated agreed upon amount and time of delivery as stated in your binding contract. A rule
of thumb is about 1% of the listing price of the home. Once you have fulfilled your part of the
contract, the earnest money is credited to your closing cost.

• Home Inspection (about 1-5 days of binding contract)-Optional to buyer but highly
recommended. Home inspector is chosen by buyer to inspect home for any defects. A report of
any findings is prepared by home inspector and provided to the buyer and agent. Each company
determines their own pricing per square footage of the home. Pricing can typically range around
$500-$650 depending upon total square footage of home and any additional requested services.
This is a buyer’s expense and paid directly to home inspection company.
• Appraisal Fee (about 7-14 days of binding contract)-ordered by your lender to assess the
value of the home to confirm loan amount is not greater than the assigned home value. An
appraisal report is prepared and provided to the buyer. This pricing can vary and is provided by
the lender company. Pricing can typically range around $500-$700. This fee is credited to your
closing cost.

Down Payment and Closing Cost

What is needed on closing day?

Cash to close (about 30-45 days of binding contract)-total amount needed to for deed to be transferred
to your name on closing day. It is a total of your down payment and closing cost.

Down Payment (DP)- is determined by your approved loan program. It typically ranges from 0% to 5%.
DP could be more depending on loan program requirements based on your credit worthiness. Some
lenders offer down payment assistance (DPA) programs. Your eligibility is based on credit worthiness
and annual income in most cases.

Closing cost- Typically ranges around 3%-4%. Closing cost consist of settlement and title fees (the cost of
doing the loan), prepaid expenses (put in an escrow account) for homeowner’s insurance, mortgage
insurance and taxes, and government recording and transfer fees. If you have any payoffs of any kind
st
nd
(eg. 1 or 2 mortgages), it would also be included here. This is also where you would receive any credit
due to you (eg. Earnest money, appraisal fee).