When the time comes for you to buy a home, new homeowners need to understand that there are ‘hidden’ costs and fees when you are ready to sign on that dotted line. We are calling them ‘hidden’ because they are not included in the actual price of the home, these costs are obtained through the buying process and at the time of closing.

Here is a breakdown of those ‘hidden’ costs.

 

Home Inspection

Although this is an optional expense, it does protect you from purchasing a home that may have a lot of issues that may not be obvious. These can include things like mold, problems with the heating or cooling system or water leaks. A rough estimate for a home inspection is $300-$500. Keep in mind, if you end up not buying the house after the inspection, you are still obligated to pay the fee.

Appraisal

This is a necessary fee that asses the home and property so your lender knows that you are paying what the property is worth. There are times when a seller may have to adjust their asking price due to an appraisal coming in under the amount of asking. Appraisal fees can run $200-$500.

Loan Application Fees

These fees start the entire loan process. A lender will need to run your credit report to ensure you can qualify for a home loan. That fee is included in the application fees. These typically run $75-$300.

Title Services

Title services include running a title search on a property, paying the notary to notarize all the documents that you sign, and the required government filing fees. It is important to get a detailed invoice for these fees so you are fully aware of what you are paying for. These fees run $150-$400.

Origination Fees

These fees go to the lender for creation of the loan. These are paid upfront and include processing the loan application. the underwriting process and the actual funding of the loan. These fees are usually based on a percentage of the loan amount and range from 0.5%-1.5%.

Private Mortgage Insurance (PMI)

If you put less than 20% down on your new home, the lender will require you to purchase PMI. This protects the lender from losing money in the event of a foreclosure. This fee can be re-assessed at such time as you have equity in your home. This fee is based on a percentage of the original loan amount as well.

 

Disclaimer- All dollar amounts and percentages are estimates.