Financial costs attached to the purchase of a new home are often more than what people expect. For this reason, people should prepare for certain fees:
- 1. Appraisal and Survey Fees
An appraisal fee ranges from $300 to $500. Having the property surveyed to verify property lines prevents later disputes with neighbors.
- 2. Home Inspection Fee
Because there may be potential problems, having a home inspection is a wise move. Employing an impartial third-party home inspector is well worth the fee as the potential buyer can then re-negotiate the home price based on the extent of any issues.
- 3. Flood Determination Assessment
Determining if a home is in a flood zone is required of lenders since they must know if the home and property have the appropriate amount of insurance.
- 4. Escrow Fee
A closing fee must be paid to the escrow company, title company or attorney conducting the closing. This fee differs from the escrow deposit that requires up to two months’ worth of property tax and mortgage insurance payments.
- 5. Application fee
A mortgage application is used by lenders to commit home buyers to them with a $400 to $500 fee.
- 6. Credit report fee
Before lending money to home buyers, mortgage lenders will run a credit report on them, charging for this report.
- 7. Origination fee
After a home loan is approved, owners must pay an origination fee that is between 1% and 5% of the cost of the home. This fee usually covers the cost of verifications, calculations in computing the mortgage and the cost of the paperwork.
- 8. Attorney fees
To ensure the legality of the loan, sometimes a lawyer is involved.
- 9. Mortgage Broker fee
Mortgage Brokers help people find a loan but often charge 1 to 2 percent of the purchase price of the house.
- 10. Prepaid interest
Between the time of closing and the first payment on the mortgage, lenders expect the buyers to pay any interest that accrues.
- 11. State recording fee
The sale of the property must be recorded with the local government.
- 12. Lender’s title insurance
Lenders will require title insurance as protection in case there is an error in the title search or if there is a claim of ownership on the property after its sale.
- 13. Owner’s title insurance
A homeowner can purchase title insurance as protection against ownership claims made on the property by another party.
