Most people are so focused on the prices of the property and interest rates they need to pay that they completely dismiss any other expenses along the way. Sure, knowing the costs of your mortgage and house is crucial, but there are other, more hidden fees that can pile up and ruin your impression of homeownership. In some cases, fees need to be paid before you get your house keys, but in others, they can roll into your home loan and be paid over time. No matter when they need to be paid, if you want to get an affordable home and have a successful purchase, here are the fees to keep in mind:
Appraisal fees
Most home purchases need a professional estimation of the house value AKA an appraisal. This is a necessary step before you can be approved for a loan. The appraisal is performed by professionals who are completely objective and require a one-time fee that?s not negotiable. Depending on your location and the size of the property, most appraisals cost between $300 and $1,000.
Home inspection
In many cases, it?s necessary to pay for house inspection. This step is often required by lenders so they can rest assured your house is livable and safe. This is also performed by professionals who usually ask for anywhere between $300 and $500, depending on your location, home type and home size. It?s usually possible to choose a home inspector, and you can simply give them the money or negotiate the issues when they come to visit the house that requires inspection.
Document preparation
Document preparation is not free because it takes a lot of time, effort and money to provide you with an accurate loan estimate. The fee that usually goes from $50 to $100 is there to cover administrative and other lender costs.
Loan fees
The loan you get is going to be your biggest expense, but sometimes these loans hide additional fees you might not even know about. These unnecessary and worthless insurance products attached to loans are mostly associated with car insurance, but it doesn?t mean you shouldn?t pay special attention to your loan policy when buying a house. In case you see Mortgage Protection Insurance on your policy, you might be eligible for a junk insurance refund because this add-on is basically useless. Contact your chosen credit insurance refund experts and see whether you?re eligible for refunds, so you can save some money.
Title fees
Title search, title settlement, title insurance binder, etc.?these all require their own fees. It?s possible to choose your own title service, but prices are usually more-less the same everywhere. Title insurance is necessary for lenders (and optional for you) because this is how they stay safe in case something goes wrong with the title of your future home. All of these title costs will roll into your loan bills.
Private mortgage insurance
There are times when you might be required by your lender to get private mortgage insurance, usually in case your down payment is lower than 20% of the house?s price. In case you stop making payments on your loan, this additional insurance will protect the lender. This type of fee is a so-called recurring fee, but it?s possible to cancel it after you?ve made enough payments on your loan (usually 20% of your house).
Homeowners? Association fees
Typically, communities with town houses or condos require all people living in the area to join a homeowners? association. This organization helps pay for common areas and buildings maintenance. In many cases, your lender will include HOA fees in your loan. Fees here depend from property to property, but a typical HOA fee for condos in the States is around $200 per month.
Taxes
Depending on where you live, expect to pay different taxes during closing, but usually, buyers need to pay two months? worth of property taxes. These taxes are paid in advance, so you might be required to reimburse the seller. There are things as transfer taxes imposed by the government. These appear during the process of passing of titles to property, and they vary depending on the country, state and even municipality and can be split between the seller and the buyer if you manage to strike such an agreement.
Property taxes
In many places, it?s necessary to also pay property taxes. These taxes cover any real estate that you own. Usually set at a local level, these taxes need to be paid annually, but in some places, you can take the option of dividing them into four payments throughout the year. It?s smart to see how much you?ll need to pay in property taxes before you buy your new house, just to make sure you can afford them.
Before you sign any papers, consider all of these hidden fees and see how your budget holds up. If you can?t afford down payments, fees and closing costs, it?s smart to keep looking for a different property or consult with an expert who will help you finance your home.
