The Unexpected Costs of Purchasing a Home
Updated: Jun 2
Purchasing a home is arguably one of the biggest financial decisions you will make in your lifetime. As you start your hunt, don't forget that there will be costs associated with your purchase other than the price of the home. Here are 5 costs to keep in mind as you begin to budget.
The Home Inspection is a crucial step in the home buying process. The findings that come from the inspection can help you negotiate price and repairs. Generally, you can expect to pay between $300 to $500 depending on the home and the location. In most cases the Buyer is expected to pay this directly to the home inspector at the time of inspection.
Title services are performed by the Title and Closing Attorney and encompass the transfer of the title from the seller and a thorough search of the property’s records to ensure to no one will pop up with a claim to the property and that all mortgage liens and judgement liens will be paid off at closing. Additionally, you will obtain title insurance which will protect the lender and your investment in the home.
Before getting a loan, you will likely be required to get an Appraisal of the home to determine its estimated value. This will be conducted by a third-party company and the cost can land anywhere between $300 and $1,000, depending on the size of the home.
Many communities have a Homeowners’ Association that enforces monthly fees. This money is used for general maintenance and updates to areas like pools, parks, and more. Typical HOA fees are around $200 per month.
The taxes each buyer pays at the closing table differ, it can range from 1 to 12 months worth of county and city property taxes. The reason for this is so that when the current years taxes come due the mortgage lender will have sufficient funds in the Escrow Account to pay the taxes in full on the new owners behalf. In most jurisdictions the Buyer will also get a credit from the Seller, at closing, in the form of a prorated amount for the current year from January 1st through the closing date, since the Seller owned the property for that period of time and is responsible for paying the taxes for the portion of time they owned the property. Additionally, there may be taxes owed to the County or State for the transfer of the home title.
If you feel that this information may help you or a client, please reach out. It is my mission to help others.
Jeremiah L. McGuire