Buying a home is one of the single-most effective methods of building wealth over time, but it does not always come cheap. The price you ultimately pay for your home often far exceeds the asking price, and while some reasons why are obvious – such as the fact that you must pay interest on your loan – there are other fees involved that are less well-known. Some of these may include:
Home inspection fees
When you are considering making a purchase as sizeable as a residence, you want to make sure you are not getting a lemon. That is where the home inspection comes into play. Home inspections involve multi-step inspections of the interior and exterior of a home, from the foundation and roof to the smoke detectors. Most home inspections will run a few hundred dollars, depending on the size of the home, among other factors.
Private mortgage insurance
Though private mortgage insurance does not impact all homebuyers, you can expect to have to pay it if you put down less than 20 percent of the price of the house as your down payment. The amount you may pay in private mortgage insurance will vary due to how much you put down initially and how strong of a credit score you have.
Appraisal fees are those that are assessed when a professional appraiser comes out to determine how much your home is worth. He or she will take into account things like market value and the condition of the home to arrive at a figure. The cost of an appraisal varies based on factors such as geography and whether the home has any unusual features, but it is fairly standard to pay several hundred dollars for it.
Lender’s origination fee
When you buy a home, your mortgage lender will assess what is known as a lender’s origination fee when processing your application. Exactly how much you can expect this fee to cost will vary based on the amount of money you are borrowing in the first place. Typically, it will be based on a very small percentage of the total loan amount.
These are some of the more common, but lesser-known, fees associated with purchasing a home, but this list is not entirely comprehensive. Depending on where and what you buy, you will likely have other expenses you need to factor in when figuring out what you can afford, such as whether you will have to pay any homeowner s association dues. For more about what goes into buying a home, consider getting in touch with a lawyer.