Video Transcript: The Costs of Buying a Home

Stacey: Planning on buying your first home? You'll need to save more than just a down payment before you can officially call yourself a homeowner. What are all the costs associated with buying a home? Let's find out, on "What Works Now."

Voice Over: AOL and Bank of America Home Loans – helping you find out what works now.

Stacey: First-time homebuyers often underestimate the complexity of the home buying process. And, more importantly, how much cash they'll need to close on a property.

Narrator: To get a better idea of where all your money will go, we decided to check in with a real estate attorney who will walk us through all the closing costs.

Stacey: I'm buying a home. Can you help me with the contract?

[Enter Bryant A. Roman of Roman & Associate, PLLC]

Bryant: Absolutely, come right this way.

[Walk together to his office]

Bryant: It's likely the largest transaction that they're ever going to make, or they've made to that point. And so you want to hire an expert that can help you through the process, because buying a home involves many different stages and there are a lot of moving parts.

Narrator: You're not required to hire a real estate attorney, but they can save you some headaches in the closing process. Expect to pay at least $500, but don't be surprised if you pay more, based on where you live and the size of your home.

Narrator: As soon as your offer's been accepted by the seller, it's time to hire an inspector.

Bryant: It's really important to hire a home inspector, because the contract provides for an inspection contingency. So you want to have a licensed inspector go in and search for such things as termites, radon, and for any structural damage. And if any of those items come back negative, you want to go back to the seller and have them remedy the situation, or give you a credit for that. Ultimately, if they're unable to do any of those things, you should be able to cancel the contract.

Narrator: Although prices vary quite a bit around the country, a home inspection should cost on average $300 to $400.

Stacey: So what are some of the other third-party and lender closing costs that I should be aware of?

Bryant: Well some of the other closing costs from a third party include title insurance fees, title search fees, recording fees and transfer tax fees.

Narrator: On average, you can expect to pay 3 to 5 percent of your loan amount to cover all these closing costs before you're handed the keys to your new home.

Bryant: Given that we're currently in a buyer's market, you can negotiate -- through your attorney or your real estate broker -- to have some of these closing costs paid for by the seller.

Narrator: You'll want to have an emergency fund on hand to be prepared for any changes in your income or unexpected expenses like medical bills or home repairs. Hopefully, you now have a much better idea of how much you can expect to pay when buying a home

[Stacey and Bryant chatting]

Stacey: Oh that's a great thing to know. I think I'm going to try and negotiate that.

Bryant: Yeah, let's do that.

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