Home Buyer’s Unexpected Expenses
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As a home buyer there are certain expenses that you expect. You know that you will have to have a down payment and you will need to pay your mortgage. You may even know that the home needs to be inspected. There are any number of other expenses that you may not expect that will cost you money and you need to make sure that you have enough cash in reserve to cover these expenses.
Home Mortgage Costs
In addition to the mortgage payments, there are lender fees that you have to pay. Every lender requires a different mix of fees. When looking at different lenders, besides considering the interest rate they are offering make certain of the various fees they charge. Below is a list of potential fees they might require or offer:
Credit report fee: Some lenders do not charge this fees and some do. Flood certification fee: This is not required in some areas where flooding is not an issue. Origination fee: Some lenders wave this fee. Processing fee: This is another fee that is sometimes waved. Appraisal fee: This is needed to determine the value of the house. Underwriting fee: This is for reviewing the appraisal and your credit history to determine if this is a good loan or not. Application fee: When other fees have been assessed this is often not charged. Discount points: Paying discount points to your lender at closing reduces your interest rate. This is advisable if you will be in your home long-term Loan lock fee: You may only want to pay this if you get a really great rate and you are afraid that the rates may go up. Broker fee: When you use a mortgage broker, they charge a fee for the service of finding you the best rate possible. This would be charged instead of an origination fee Inspection fees: Home inspection and Pest inspection are required to make sure it is a sound investment. Commitment fee: Usually you don’t need to pay this fee. Tax service fee: Most lenders pay the property tax for you and can charge a fee for this. Miscellaneous administrative fees: These are not so common, but can occur.
Taxes and Fees Owed to the State
Many states require transfer registration fees and various taxes. Every state is different, so research the laws of your state. Some states even charge a sales tax. Some states also charge a stamp duty although first home buyers sometimes get a break.
Lenders Compel Mortgage Protection Insurance Purchase
Mortgage insurance is required by the lender when you put less than 20% down when purchasing your home. It can protect you in circumstances where you might not be able to pay your loan. Coverage can pay out in case of death, disablement or involuntary unemployment.
Legal Fees Vary from State to State
Legal fees may cost up to two per cent of the value of the property. This depends on the state and the type of transaction of your purchase.
Do Not Forget Moving Costs
This of course depends on the distance that you are moving. Are you moving yourself or are you hiring it done. You may also need to pay deposit fees in order to get utilities hooked up. You may want to paint or do some other home improvement projects before moving in.
Consider all these costs when you buy your new home, so that you don’t get any nasty surprises on closing or moving day.
