When gearing up to purchase a new house, budgeting for mortgage payments is at the forefront of most homebuyers’ concerns. But in addition to these, you should also prepare for other important fees and expenses relevant to your transaction.
Here is a guide to the costs to expect when you buy your next home:
Down payment
One of the first major expenses you must think about when shopping for a new house is the down payment you’ll need to put forward. While some home loans, especially government-backed FHA, VA, and USDA loans can allow minimal to zero down payment (depending on certain qualification criteria), most homebuyers are better off paying a substantial down payment upfront.
A down payment of 20% is considered ideal. By paying one-fifth of the home’s price early, homebuyers can secure the best loan terms from their lender, including smaller monthly mortgage payments and more favorable interest rates.
Home inspection fees
Professional inspections are typically required before a home purchase can be completed. Depending on the house’s age and condition, you might need to have different types of inspections done on the property, ranging from basic structural checks to inspections for pests, mold, and radon and other harmful substances.
Home appraisal fees
Like a home inspection, a property appraisal is required before your transaction can close. Lenders refer to this professional assessment of the property’s value to justify the amount that they will allow you to borrow. Expect your lender to require you to pay this fee upfront.
Property survey fees
A property survey determines the specific boundaries of the land that you’re buying. In some cases, however, the existing survey is unavailable, which means you’ll have to get a new one done.
Mortgage-related costs: Loan origination, underwriting, and application fees
You will need to pay your lender for putting together your home loan. Discuss your options with your loan officer. You might be able to use these fees to lower your monthly payments by incorporating discount points into the fees that you pay the lender at closing. You’ll need to pay more upfront with this strategy, though.
Private mortgage insurance
If you’re unable to pay 20% of the property’s asking price as down payment, you’ll need to purchase mortgage insurance. Lenders require this from borrowers who put down less than 20% as a precaution in case they default on their mortgage.
You can pay for mortgage insurance upfront or spread out the total amount by rolling it into your regular monthly payments.
Home warranty
While home warranty plans typically come standard with brand-new homes, you can also consider getting one if you’re buying a pre-owned property, where used appliances and fixtures can break down or have issues sooner.
Title-related expenses: Search, settlement, and insurance
There are several fees and service charges related to the title of the property you’re about to buy. You need to pay for the title search and settlement, and you have the option to secure title insurance, which protects you and the lender from financial losses resulting from the possibility of ownership disputes over the property.
In most cases, title insurance can be tied into your mortgage or paid as part of your closing costs.
Homeowner’s insurance
Buying a house is a significant investment. Protect it with a suitable home insurance policy.
Your home insurance can vary in terms of what it covers, so make sure to discuss closely with your agent or insurance company to determine exactly what you’ll need. Otherwise, you might be paying a premium for special coverage that your property likely won’t use.
Property tax
Property taxes vary depending on the assessed market value of the property and the millage (tax assessment) rate in your area. Discuss with your local agent to get an idea of how much your liability will be.
State recording fees
Recording fees are what you pay for recording your home purchase details into your county’s register of deeds.
Homeowners’ association dues
If you’re moving into a neighborhood with a homeowner’s association membership, learn about the fees you’ll need to pay. In addition to monthly dues, you might also need to shell out for membership processing fees before you move in.
To get accurate estimates of how much these fees and charges will cost you when you buy houses for sale in Brookhaven or Roswell, GA, contact the Page Morgan Real Estate Group. Our local real estate experts look forward to giving you a helping hand. Call us today at 770.579.5650 or 770.509.0700, or send an email to info(at)pagemorgan(dotted)com.
