Hidden Costs When Buying a Home
You are prepared. You’ve spent the last several months cleaning up your credit. You’ve talked to a lender and been pre-approved for financing. Then, you find a house that meets all your needs and most of your wants. Let’s say it is listed for $225,000. So, you want to make an offer and double check with your lender that you can get this amount, but as veteran house hunters know, you are going to pay more than $225,000. As with many things we buy, there are some hidden costs to home-buying. So if you are buying your first house, take note of these hidden costs so there are no unpleasant surprises.
In addition to these four hidden costs, here are 12 home buying expenses to plan for.
1. Home Inspection. Many lenders require a home inspection, but even if your lender does not require one, it is a good idea. A few hundred dollars up front could save you thousands of dollars in repairs should there be hidden issues.
2. Survey of Property. Many lenders also require a survey of the property so the precise boundaries and property size are clear. Typically these cost a few hundred dollars as well. No big deal. But knowing ahead of time can reduce your stress during the closing process.
3. Taxes and Insurance. Of course you know you are going to have taxes to pay, but you may not realize that those taxes are likely going to have to be prepaid at your closing. Many lenders require an escrow account, which allows your lender to pay your taxes for you, however, what you may not have realized is that you may be required to pay your taxes upfront to your lender. So, don’t be surprised (or stressed) at closing when you are asked to pay taxes and homeowner’s insurance, which can be several hundred dollars.
4. Fees. There are a number of fees you may be required to pay at, or before, closing: a) Appraisal fee. b) Title service and lender’s title insurance. c) Tax service fee. d) Lender’s origination fee. e) Government recording charges. Some of these costs are not necessarily hidden. However, it is good to keep in mind when looking for your dream home, that regardless of the asking price, you will be paying more - and knowing that upfront can make your homebuying experience considerably less stressful.