Purchasing a home is arguably one of the biggest financial decisions you will make in your lifetime. As you start your hunt, don’t forget there will be other costs associated with your purchase than the price of the home. Here are a few fees to keep in mind as you begin to budget.
Home inspection. This is a crucial step in the home buying process. The findings that come from the inspection can help you negotiate price and repairs. Generally, you can expect to pay between $300 to $500 depending on the home and the location.
Title services. Title services encompass the transfer of the title from the seller and a thorough search of the property’s records to ensure that no one will pop up with a claim to the property. Additionally, you may need to buy title insurance which will protect the lender or your investment in the home.
Appraisal fee. Before getting a loan, you will likely be required to get an appraisal of the home to determine its estimated value. This will be conducted by a third-party company. A typical, single-family home appraisal will range from $450 to $550, but can vary depending on a number of factors, including the size of the home, the value of the property, condition of the property and the level of detail involved in the appraisal.
HOA fees. Many communities have a homeowners’ association that enforces fees. This money is used for general maintenance and updates to areas like pools, playgrounds, grounds upkeep, and more. Not all neighborhoods are subject to an HOA fee and fees can vary depending on the property and ameneties. HOA fees can be collected on a monthly, quarterly, or annual basis.
Taxes. The taxes each buyer pays at the closing table differ, but it is not uncommon for it to be up to two months’ worth of property taxes. Additionally, there may be taxes for the transfer of the home title. The amount of taxes you will pay will depend upon the location of the property. Properties may be subject to both city and county tax rates.
Homeowners Insurance. Homebuyers are required to carry homeowners insurance, which covers losses and damages to an individual’s house and assets in the home. The average annual homeowners insurance premium is around $1,200, but costs vary widely from state to state and house to house. The policy is paid on a monthly basis as part of your mortgage payment.
Mortgage Insurance. This type of insurance is typically required by the bank or mortgage company for homebuyers making a down payment of less than 20% of the cost of the property. Mortgage insurance covers the lender for taking on the extra risk of a home buyer who doesn’t meet the usual mortgage requirements. If the buyer should default on payments, the mortgage insurance would compensate.
If you have additional questions about the homebuying process, please feel free to contact me – email@example.com.