Costs You Haven't Thought About.
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:
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.
- 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.