Few things in life can make your heart flutter quite like finding the perfect home — the one you’ve been dreaming about since you were little, and the one you can picture yourself living in for the next however-many years. Once you find this ‘perfect home,’ it will be very tempting to make an offer to buy it right away. After all, no one wants to see their dream home go to someone else, right? But there a number of home buying fees you should know about.
Buying a house is no small matter. It is a decision that will affect the rest of your life, particularly the state of your finances. It is thus important that you first assess whether you’re financially able to purchase your dream house and the right time to buy. After all, down payments, mortgages, and lending interest payments are not the only costs attached to buying a home. There are a lot of expenses that may or may not be covered in your loan package, but expenses that you nevertheless have to prepare for as an aspiring new homeowner.
Here are some of them.
Earnest Buyer Fees
Before you even get to signing the paperwork, the seller will most likely ask you for a security fee of $1,000 or more. This will be called your ‘earnest buyer’ deposit, which basically assures the seller that you are serious about making an offer.
Once everything is settled, you will either get your earnest deposit back, or it will be applied to your total amount payable. However, if negotiations fall through, through no fault of the seller, you cannot expect to get the hefty deposit back.
You might already be prepared to pay for interest your lender will charge on your home financing, but do know that there are several upfront fees you will have to pay the bank or lending institution to get your loan going. These common home buying fees may include origination fees and underwriters’ fees, which are basically charged by lenders for setting up the loan.
Additionally, you would have to pay for necessary documents like copies of your credit reports, which are required for your loan application.
Home Inspection Fees
One completely optional thing you have to pay for is home inspection services, but you are highly advised against skipping it. Before shelling out money for all these costs, and for the hefty mortgage, of course, you have to find out if the property you’re eyeing will actually end up being a good investment.
The costs for home inspection services vary, but it pays to spend more on a well-insured home inspector, which protects the home inspector and potential home buyer from any unnecessary spending just in case of an oversight problem or property damage while they’re inspecting your dream house.
Another of the common home buying fees are insurance payments. Insurance payments, like mortgage insurance or Private Mortage Insurance (for when you don’t have enough for a 20% downpayment on the property), are usually rolled into your monthly mortgage statements, but it still pays to know exactly how much you’re paying for these so you can check where exactly your money goes.
Expensive as they may be, insurance policies will not cover everything — especially not calamity-caused issues. So more often than not, you will be offered an add-on warranty for your home to protect you from any foundational or systemic problems that may arise during your first few years of homeownership. There are several questions you need to ask before signing up for warranty services, but it’s generally a good idea to get one for your peace of mind.
Once you have all these fees and charges sorted out, and your offer has been accepted, you have to prepare for the big move. Depending on your location and the amount of stuff you’re moving with you, professional moving costs could range from as low as $200, all the way up to $2,000.
Better check this one early so you won’t have it hanging over your head on the actual day of your move. It should be the happiest and most monumental day of your adulthood so far, so don’t let last-minute surprise expenses ruin it.
As we wrap up, be reminded that you shouldn’t feel terrified of all these costs that are associated with buying a new home. These fees exist and are paid beforehand to ease your transition into being a homeowner moving forward, so think of it as an advance you’re paying to have it easy once you’re settled in. With that, we bid you the best of luck on making that offer for your dream home.
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We hope you found this blog post on All The Fees to Be Aware of Before Making an Offer on Your Dream Home useful. Be sure to check out our post on Top 6 Suggestions Before You Make An Offer On A House for more great tips!
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