You might go into the home-buying experience with the notion that the price you agree to with the seller is the final cost for your purchase. But this is hardly the case. There are a number of additional fees associated with buying a home, and if you’re on a tight budget, you need to plan ahead so that you don’t end up with a bigger tab than you anticipated. Here are some of the common fees you’ll be expected to pay when you purchase real estate.
Inspection: This will almost certainly be lumped in with bank fees since lenders generally require a home to undergo inspection before they’ll agree to give you the funds to make your purchase. This is for their protection more than yours. After all, they want to make sure the money they’re lending is for a wise investment in order to better ensure it is paid back. But you will be the one on the hook to pay the home inspector’s fee.
Land Survey and Title Search: Not all banks require a land survey, which is conducted to ensure that the boundary lines on the property are as listed on the title. But nearly all lenders perform a title search to see if there are other financial claims (like liens or second mortgages) existing for the property you’re interested in purchasing. And if your lender requires these background checks, you’ll have to pay for them.
Points: If you’re interested in lowering the interest rate attached to your loan, you can buy it down via a points system. The cost could depend on the overall price tag for the home you wish to purchase, and it may end up being fairly expensive to knock points off your loan. But it could also save you money in the long run by lowering your interest rate. It’s something you’ll need to discuss with your lender and number crunch a bit before you decide.
Closing Costs: Closing costs include all manner of fees, some of them non-negotiable (taxes, filing fees, etc.) and some of them potentially negotiable (such as origination and lender fees). Generally, these many fees get lumped together into a bill that totals about 3-6% of the cost of the home. But you can ask for discounts, you can negotiate, and in some cases you can get sellers to pay some or all of the closing costs. You never know what you can gain just by asking. And a realtor from a reputable company like Bill True Hilton Head Real Estate should be able to help you negotiate.
Insurance: You are probably aware of the fact that you’ll have to spring for homeowners insurance and protection against extras like flood and other natural disasters (depending on the region you live in) when buying a home. What you may not know is that some lenders require mortgage insurance, as well. This is generally called for in loan situations where your down payment is less than 20% of the total cost of the home and it exists to protect the bank from loss should you default on your loan payments. The good news is that you can usually stop paying for this insurance when you hit the 20% mark paying off your mortgage.