When you’re looking for a new home, it’s easy to get carried away with the idea of saving enough money for the down payment. However, it is important to remember that there are several other costs that you will need to cover as well. Too often, potential buyers spend years saving for the deposit, only to find that they still can’t afford to buy a home because they can’t cover the other costs.
In addition to avoiding the heartache when watching your dream home disappear, knowing other home buying costs helps you budget well. This way, you can be sure that you can afford your new home, plus the additional costs, and still have money in the bank for those unforeseen costs afterwards. to relocate. Below, we’ll take a look at the 9 fees that are worth considering.
When you take out a mortgage, your lender will require that an appraisal be done on the property in question. This lets them know that you are not paying too much and that in turn, they are not lending more money than they should. Nationally, the average cost of a home appraisal is $ 335.
In addition to the appraisal, it is important that you have the property inspected by a certified home inspector. While not all lenders require it, it’s a good idea to have an inspection done anyway. Inspections differ from appraisals in that an appraisal is used to determine the value of a property, inspection is used to determine the physical state of it. Inspectors will be on the lookout for damage that needs repair, potential health hazards, and other things the buyer should be aware of. The average cost of a home inspection is $ 315, although it can save you thousands of repairs you didn’t know about.
Some lenders may require you to do a survey. This study will detail the boundaries, location of utilities and structures, as well as any encroachments and easements on the property. The national average cost of this service is approximately $ 500.
You will need to hire a real estate lawyer to help your transaction go smoothly and make sure everything is flawless. Legal fees differ from case to case and are usually calculated based on the sale price. When you get a quote from a lawyer, make sure their price includes any additional expenses in addition to the legal fees themselves.
Private mortgage insurance
If your advance payment is less than 20%, your lender will usually ask you to pay for private mortgage insurance (PMI). These recurring charges can quickly increase and usually cost between 0.5-1% of the total loan amount per year. On a home worth $ 250,000, you could end up paying over $ 200 each month just to cover the PMI.
While home insurance isn’t always mandatory, the extra cost is well worth it. Standard policies generally cover theft, fire, flood and inclement weather, although you can normally tailor your premium to your needs. You can expect to pay anywhere from $ 500 to $ 2,000 per year on average, with larger policies costing more.
Most lenders require that you carry title insurance because it covers them if there is a problem with the title of your property. As such, most mortgages will include this cost, either as a closing cost or included in the total loan amount. The cost differs from state to state, but you can expect to pay around 1% of the purchase price of the property.
Additional loan fees
When you take out a mortgage loan from a lender, you will need to pay a few additional fees to make sure your application is fully met. The origination fees are paid to the lender for their services in creating the loan, and generally cost 1% of the total loan amount. These fees are usually automatically added to the loan. Additionally, you can expect to pay a nominal fee for the preparation of any document, as well as fees associated with obtaining a verified copy of your credit report.
Once the closing costs are covered, there are moving costs to consider. These include professional moving service fees, utility connections, parking permits, etc. Plus, be prepared to cover the cost of any prepaid bills or taxes that the previous owner had already paid in advance. Together these costs can easily reach $ 5,000 to $ 8,000.
It’s worth considering all of these fees up front, as they can quickly add up and add tens of thousands of dollars to the bill. However, with proper planning, you can manage these costs, and even avoid some of them, like PMI.