There are many costs associated with buying a home that go beyond the actual home payment. First-time buyers are the ones most often surprised by all of the extra costs, but even experienced home buyers may not understand all the costs fully. Expenses are often bundled up with the mortgage, and can be easily overlooked – here are a few of the hidden costs of buying a home to keep you ahead of the game.
1. Title Insurance
This one-time cost insures new owners against someone else claiming the property is theirs, and attempting to claim that the property was illegally or inappropriately sold to you.
2. Home Inspection
This is optional and is paid for by the homebuyer. While we all think we can assess the condition of a home, good inspectors will know exactly what to look for and will often provide documents explaining upcoming maintenance schedules to keep a home in good condition. This is often paid at the time of inspection and is an expense to the buyer even if the purchase does not close. While you may have mixed feelings over the cost, a good inspection that discovers a costly issue can help avoid an ill-advised home purchase. It’s well worth it.
3. Homeowner Association Dues and Fire Dues
When purchasing a condominium, townhouse or other type of property in a planned development, you’re obligated to join that community’s homeowners’ association. Fees go towards upkeep of common areas, and building maintenance. These may be paid monthly or annually, and when buying a home you may be expected to pay a prorated portion of dues already paid by the seller.
4. Bank Wire Fees
Transfer of funds for the purchase is typically done electronically, and there is often a bank fee the buyer must pay at closing.
5. Brokerage Administrative Fees
If you’re working with a brokerage, there are many that charge administrative and marketing fees in addition to commission at closing. Read contracts carefully to know in advance and avoid being unpleasantly surprised by the hidden costs of buying a home with a brokerage.
6. Closing Costs
There are a number of fees associated with the closing, and the actual transaction. These can include the closing attorney, service or notary, as well as processing fees, fees for copies of documents, and fees for postage/shipping of documents and checks.
This article was written by Glenn S. Phillips, CEO of Lake Homes Realty.