How Much Does it Cost to Buy a House in Ann Arbor?

If you’re thinking of buying a house in the Ann Arbor area, it’s important to take into consideration “How much does it cost to buy a house in Ann Arbor.” After all, one of the worst decisions you can make financially is to purchase something you can’t really afford. This is especially true when it comes to buying a house because, for many people, it is the biggest investment that will ever make. Home pricing is so varied Of course, this is where the help of a trusted lender would come into play. By looking at your finances, they can give you a pre-approval amount. This will tell you how much you can afford to spend on a home and what your max loan value can be. You may want to check out our blogs How to Buy a House and How to Increase Your Mortgage Pre-approval Amount as well for additional information!

It is important important to keep in mind that the offer price is only part of the total cost of the home.

The average price of a home in the city of Ann Arbor was $435,000 in January 2022. However, it is important to keep in mind that the offer price is only part of the total cost of the home. In today’s blog we’re going to dive into additional costs you can expect to pay at closing (aka your closing costs) as well as other expenses that come with buying a house. Check out our blog 

There are 4 basic additional costs that come with purchasing a house that you need to be aware of to properly budget for. These expenses will need to be paid in cash. Make sure, before you write an offer, that you have enough money in the bank to cover these often overlooked expenses. Of course, special circumstances may require additional expenses, but these are the ones that pretty much everyone has to pay.

The 4 basic additional costs are

1. Inspections
2. Closing Costs
3. Maintenance and Repairs
4. Moving Expenses

Inspections

Inspection costs depend on the company that you use and the number of inspections that you have done. It is always recommended that you get a general home inspection. I have seen be anywhere from $300-$900, however, they usually run about $400. You also have the option to do additional inspections such as

• Pest (required for VA and FHA loans)
  • $100-$150
• Radon
  • $140-$165
• Chimney
  • $100 – but most likely they will charge you to clean the chimney as well so they can see it better which is another $50-$100
• Sewer
  • $200-250
• Well and Septic
  • $300-$400

Closing Costs

Unless you are purchasing a fixer-upper, closing costs are going to be your biggest and most unavoidable expense.  The tricky thing is that closing costs vary so much from lender to lender and situation to situation. These costs are based on someone who is obtaining a mortgage. If you are going to be paying cash, you can eliminate the appraisal fee, escrow reserves, lender fees, and downpayment. Your closing costs would be paying for the price of the home, taxes, and recording fees.

Here is a list of closing costs that you can expect to pay if using a lender. Overall, you can expect to pay  3%-5% of the loan value in closing costs (excluding the down payment). This will be the key to knowing how much it cost to buy a house in Ann Arbor. 

• Appraisal
  • $300-$500
• Taxes
  • Depends entirely on where you live and how expensive of a house you buy
    • Keep in mind that townships typically have lower taxes than cities do
      • Ann Arbor and Ypsilanti have the highest tax rates
  • Looking at the home’s current taxes will help give you an idea of how much you will pay, but please be aware that the taxes will go up after you close. Here is a link to a Property Tax Estimator for the state of Michigan for an estimate of what your new tax amount will be.
• Recording Fees
  • These are $30 in Washtenaw County
• Home owner’s Insurance
  • It varies depending on the insurance provider, size of the house, and type of coverage you get.
    • Expect prices between $600 and $1500 on average
• Additional Escrow Reserves
  • This varies depending on the lender. Please talk to your lender about this amount. Lenders require a minimum balance in the escrow account in case tax and insurance bills are higher than the amounts they estimated. For now, you can just plan on about $1,000 for easy budget estimating.
• Lender Fees
  • This also varies depending on the lender and requires you to contact them. For now, you can just estimate about $500-$1,000.
• Down Payment
  • This isn’t technically a closing cost, but it is cash that you will have to bring to the closing table.
  • Depends on how much cash you have available to put down. More is better, but here are the minimums.
    • USDA, Physician, and VA loans can have no down payments
    • Some conventional loans can have as little as 3% down
    • FHA’s are 3.5% down
  • Just an FYI, although conventional loans can be had for 3% down, you will have to pay a Private Mortgage Insurance (PMI) fee every month until you pay off 20% of the value of the home.

Here is a closing cost estimator as well to help you out!

Closing Cost Estimator

Maintenance and Repairs

Ideally, you will be one of the lucky few that purchase a home that is move-in ready, perfectly suited to your style, and therefore needs nothing done to it. More often than not, you will at least need to paint. If you’re like my husband and me who only buy fixer-uppers, you will need to do a lot more than that. This is where a trip to your preferred hardware store will come in handy.

Before you even start looking at homes, it is a good idea to look at the hardware store and pick out a few common things that need replacing on a new home such as paint, flooring, light fixtures, and appliances. Take pictures of the items you like and write down their prices. These costs can add up quickly so pick out a bare minimum style that you would accept as well. Then when you are looking at homes and you see that the kitchen is going to need new flooring and appliances, you can look at your budget and your list and decide where you want to stretch your budget and where you might splurge. Since you did your research, you will know exactly what things are going to cost you before you write an offer.

Moving Expenses

Moving expenses are one of the most overlooked expenses in buying a new house. These expenses include the obvious movers, boxes, packing materials, and a moving truck. They also include the less obvious take-out meals you order when you are busy packing and unpacking, the extra gas required for the moving truck, and cleaning supplies. Not to mention the random things that you need right away but can’t find where they’re packed, that require you to run to the store and buy new ones. All of these little nuisances get lumped into moving expenses. Every situation is different but here are some estimated costs

• Movers
  • $1,000-$2,000 for a local 2 man crew for a moderate-sized home
  • $2,000-$6,000 for a long-distance move for a moderate-sized home
  • It can get a lot more expensive if you have a larger home, a lot of junk, or a big workshop
• Boxes, Tape, Packing Paper, and Bubble Wrap
  • $100-$200
• Moving Truck
  • $20-$40 per day plus $0.79 per mile
• Take-out
  • Depends on the size of the household as well as how fancy your take-out is but $300-$500 is not unreasonable
• Cleaning Supplies
  • $100
• Random items you can’t find or break in the move
  • $200-$500
    • This number could be higher (i.e. you drop your big screen tv carrying it into the house)

So now you know how much it will cost to buy a house in Ann Arbor. Thank you so much for taking the time to read this. As always, please let us know if there is anything we can ever do to be of assistance.

Chrissy Myers

MI Home Team