14 Extra
Costs to be Aware of
Before Buying a Home
“The last thing you need are
unbudgeted financial obligations cropping up hours before you take
possession of your new home.”
Whether you're looking to buy your first home, or
trading up to a larger one, there are many costs - on top of the
purchase price - that you must figure into your calculation of
affordability. These extra fees, such as taxes and other
additional costs, could surprise you with an unwanted financial
nightmare on closing day if you're not informed and prepared.
Some of these costs are one-time fixed payments,
while others represent an ongoing monthly or yearly commitment.
Not all of these costs will apply in every situation, however it's
better to know about them ahead of time so you can bud-get
properly.
Remember, buying a home is a major milestone.
Whether it's your first, second or tenth home, there are many
important details to address, during the process. The last thing
you need are unbudgeted financial obligations cropping up hours
before you take possession of your new home.
Read through the following check-list to make sure
you're budgeting properly for your next move.
1. Appraisal Fee
Your lending institution may request an appraisal
of the property which would be your responsibility to pay for.
Appraisals can vary in price from approximately $250 -$ 500.
2. Property Taxes
Depending on your down payment, your lending
institution may decide to include your property taxes in your
monthly mortgage payments. If your property taxes are not added to
your monthly payments, your lending institution may require annual
proof that your taxes have been paid.
3. Survey Fee
When the home you purchase is a resale (vs a new
home), your lending institution may ask for an updated property
survey. The cost for this survey can vary between $700- $1,000.
4. Property Insurance
Home insurance covers the replacement value of
your home (structure and contents). Your lending institution will
request proof that you are insured as it protects their investment
on the loan.
5. Service Charges
Any new utility that services your hook up, such
as telephone or cable, may require an installation fee.
6. Legal Fees
Even the simplest of home purchases should have a
lawyer involved to review all paperwork. Shop around, as rates
vary greatly depending on the complexity of the issues and the
experience of the lawyer.
7. Mortgage Loan Insurance Fee
Depending upon the equity in your home, some
mortgages require mort-gage loan insurance. This type of insurance
will cost you between 0.5% -3.5% of the total amount of the
mortgage. Usually payments are made monthly in addition to your
mortgage and tax payment.
8. Mortgage Brokers Fee
A mortgage broker is entitled to charge you a fee
in order to source a lender and organize the financing. However,
it pays to shop around because many mortgage brokers will provide
their services free to you by having the lending institution
absorb the cost.
9. Moving Costs
The cost for a professional mover can cost you in
the range of:
10. Maintenance Fees
Condos charge monthly fees for common area
maintenance such as grounds keeping and carpet cleaning in
hallways. Costs will vary depending on the building.
11. Water Quality and Quality Certification
If the home you purchased is serviced by a well,
you should consider having your water checked by your local
experts. Depending upon where you live, determines whether or not
a fee is charged, to certify the quantity and quality of the
water.
12. Local Improvements
If the town you live in has made local
improvements (such as the addition of sewers or sidewalks), this
could impact a property’s taxes by thousands of dollars.
13. Land Transfer Tax
This tax is applied whenever property changes
hands and the amount that is applied can vary.
14. What Home Costs are Usually
Prepaid at the Time of Closing?
Bring your checkbook to closing.
You will prepay property taxes, hazard insurance (usually a year's premium), interest for the month in which you close, and such assessments as your annual homeowners' association fee when you close on the sale of your home.
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