by Hope Teller
There are many fees and costs that go into a closing that can be overlooked if not trained to look for them. Most people want to be told what fees they will be paying and explained why they are paying for them. Unfortunately, if there is a lack of communication, and depending on the amount of people involved, some of these fees and answers can be missed. The best way to go about figuring out what you will be paying during the homebuying process is to make a list and do your homework. Below is just one way to learn and understand the different costs you need to save for when you buy a home.
FEES BEFORE CLOSING:
- Home Inspection – most times a home inspection is a contingency, but you want to be sure the investment purchase you are about to make is worth it. This can be hundreds of dollars sometimes.
- Appraisal – most times, the lender has this paid up front before closing and is mandatory in a financed transaction.
- Termite, if applicable, can be paid up front or at closing, but if there is treatment to be done, you will need to know this before you close so the seller can pay for it.
- Repairs – depending on the agreement, there could be repairs that need to be completed that were found in the walk through inspection which could also take a toll on your wallet. Have a “go to” savings account.
- Earnest Money Deposit – many first time homebuyers forget they have to put a deposit down when they make an offer on the property as a Good Faith to the seller.
- Buying down an interest rate – if you want a better rate with your lender (depending on your credit score, etc), you have the option to buy down to get a better interest rate.
- Real Estate Attorney – if needed – there could be legal questions or an estate/trust/1031/IRA involved that you would rather have an attorney handle.
FEES AT CLOSING:
- Settlement closing costs, including lender/owner title insurance premiums, closing/title fees, clearing title, etc.
- Lender fees, including origination, credit report, homeowners insurance, MIP or VA Funding fee (if applicable), escrows on the loan
- Survey – if you want a survey plat/map for your new property to know where it ends and begins, this is an additional fee as well, and is dependent on the acreage.
- Agent Admin fee – if you and your real estate agent have an agreement for you to pay an admin fee, this will be collected at closing
- Home Warranty – this is always beneficial to get because it will cover you for the first year on your appliances (sometimes the title company will pay the first year)
- Real Estate Taxes – depending on when you buy in the year, real estate taxes could be due (June or December, for example for semi-annual taxes, in which a proration will also be given)
- Homeowners Association Dues/Condo Dues/Transfer Account/Set Up/Capital Contribution fees – if there is an HOA/POA/Condo on the property, or more than one, with all transfer of ownership, there will most likely be set up fees.
- Government Recording/Transfer taxes – these will need to be paid, per the local and government courts, for transfer of ownership and recording of the documents with the clerk of court.
FEES AFTER CLOSING:
- Maintenance/Renovations – if you purchased a fixer upper home, you should have some money saved to start renovating or improving the home (or if you got a 203K loan).
- Moving Expenses – mover fees, truck, loading, unpacking, disbursing of items – this can be stressful and time consuming
- Utilities (turn on fees) – to activate your utilities and to put in your name, there are activation fees.
- Furniture – after you have moved all your things in, you may notice that you have more space than before and need to decorate the blank spaces.
- Appliances – if the home you purchased did not come with a dishwasher, fridge, or washer/dryer, these will also need to be purchased as additional costs.
Above I have written out a common list that you can use with you when you purchase a home. This will help you keep an eye out for hidden costs and will allow you to budget the smart way before purchasing. It is always better to be properly prior planned before putting yourself out there.