Costs You Haven’t
Thought About
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We all know that buying a new home can be expensive. You work
with a lender, negotiate a good price and plan a budget so that
you can afford the home of your dreams. But have you really
thought of everything? Below are some costs associated with home
buying that you may not have planned for in your budget:
- Mortgage Origination Costs - This may also be called a
processing fee. The origination fee is charged by the lender
to cover the costs of creating, processing and closing your
mortgage. Generally, the origination fee is 1% to 1.5% of
the amount of your loan. So, if your mortgage is for
$300,000, be prepared to pay an origination fee of
approximately $3,000. This fee is typically paid at the
closing of the property. Some lenders may or may not charge
you an origination fee, so be sure ask your lender for
details.
- Mortgage Application Fees - The mortgage application fee
is charged to you by the lender to simply apply for the
mortgage. Regardless if you qualify for the loan, this is a
non-refundable fee that may range between $150 and $450.
Many lenders will add this into the closing costs, or be
willing to waive this fee altogether. Speak with a
representative at your mortgage company to find out about
their policies regarding application fees.
- Homeowner’s Insurance - Another unexpected expense is
homeowner’s insurance. Simply having homeowner’s insurance
is not enough. You must arrive at the closing with one year
of homeowner’s insurance prepaid. Although you may be paying
during your first year of ownership for homeowner’s
insurance, this actually covers your second year of
ownership, not your first. At the time of closing, be
prepared to show proof of homeowner’s insurance for the
first year. For help on homeowner’s insurance, feel free to
contact me at any time!
- Inspections - Before you purchase your new home, you
must conduct a variety of inspections. You will need a home
inspection, pest inspection and possibly a well or septic
inspection. Each of these inspections will cost
approximately $150, which is usually paid for by you at the
time of inspection, not at the closing. Although you may not
have originally planned for this expense, finding a major
fault in a home before you close may save you thousands of
dollars, so it truly is a worthwhile investment. Many
problems found during inspection can also be negotiated with
the seller. Call me to find a trustworthy inspection
professional.
- Closing Fees - This fee is paid to the closing broker
for facilitating the closing and to cover their costs
involved with document preparation for closing on the
property. There are a variety of costs that may constitute
the entire closing fee. It is best to discuss this with your
agent before looking at homes, so that you have a clear
understanding of what will be expected of you financially at
the closing. Also, before attending the closing, be sure to
ask your agent what forms of payment are acceptable.
Keep these possible costs in mind when planning your budget. As
an agent, I am experienced in every financial aspect of the home
buying process, and would be happy to work with you on planning
for these costs. Contact me to work towards a financially sound
solution to your home buying needs.
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