Some of the initial costs you will have to pay before closing will be the Earnest Money, Option Money, Inspection, Lender Fees, and the Down Payment on your loan.
Typically, the Earnest Money will amount to around 1% of the home's purchase price. This money is used to hold the home for you during the closing process. Don't worry though, that money will be credited back to you on the final sales price, and can be refunded if you choose not to purchase the home.
Option Money gives you the right to walk away for any reason for a certain number of days, typically 7-10. This allows you to inspect the home, check for any issues that might arise, and do your due diligence. In the Austin Area, the option is right around $25 per day on average.
Inspections are the most important part of the homebuying process. During your option period, you will hire a licensed home inspector to visit the home and check it from top to bottom. They will provide you a detailed report of any safety issues or other areas of concern that you need to be aware of. The price of the inspection varies due to the size of the home and additional options purchased (such as a termite inspection) but is usually somewhere between $350 and $500.
Lender Fees can vary drastically, and include the appraisal, credit report, recording, legal fees, etc. The lender you decide to use will provide you with a Settlement Statement detailing all of these costs. We recommend putting aside at least 2-5% of the loan amount aside for these fees, just to be on the safe side.
Lastly, the Down Payment can range anywhere from 3.5% on a FHA loan to 5% on a Conventional loan. USDA and VA loans both have a 0% down payment but have special criteria to qualify for those programs. Putting 20% down is not necessary, but does save you from paying an additional PMI fee on your monthly payments.
In Texas, the Seller of the property agrees to pay both the agent listing their home for sale and the buyer's agent. This means that typically, you don't pay anything to hire the services of a Realtor. In fact, hiring one can actually save you money by having someone on your side to negotiate a better deal on your behalf.