When it comes to buying a new home, especially for the first time, people get so wrapped up in the cost of a mortgage
and the interest rate on the loan, they forget the other costs associated with home buying and closing. However, it is these costs that can have a big impact on your home purchasing experience because while many seem relatively low in cost, the costs do add up.
Here are some of the more common expenses and what to expect when buying a home:
Credit Report Fees
Lenders will need to order a verified copy of your credit report and score before making a lending decision.
Homeowner’s Insurance
Insurance is always required when borrowing the money to purchase a home. You’ll likely need to purchase policy coverage before closing on the home.
Appraisal Fees
A perspective homeowner will need to pay for an appraisal to ensure the home is selling at fair market value and so taxes on the home can be calculated.
Document Fees
The lender or mortgage broker may charge you for document preparation time in order to prepare the loan.
Escrow Fees
An escrow account holds the money as the buyer and seller work out an agreement during the closing process. You may also need to have portion of your mortgage payment go into the escrow account to pay for insurance and property taxes.
PMI (Private Mortgage Insurance)
If you do not have a large enough down payment towards the home, you may be required to purchase Private Mortgage Insurance. In some cases, you’ll need to pay a year’s worth of insurance up front or you might be able to roll the payment into your monthly mortgage payment.
Property Tax
There may be instances where property taxes are owed to the seller who has already paid for taxes during the time period you were the owner.
Title Insurance
This is a type of insurance that will cover you in the event the person selling the home doesn’t actually own the home or any information provided for the title was false.
There are a number of other instances that may warrant a fee paid out by the new homeowners. You can discuss these fees with either your loan officer or the realtor you are working with on the sale. The more money you are able to save in preparation for your loan, the better off you will be at the time of closing and moving into your new house.
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