Your mortgage payments can also serve as your most significant routine expense. When reviewing your budget, it is best that you calculate in the potential hidden costs that come along with purchasing a home. Although you may have considered the extra costs, they can easily add up, particularly if you are a new homebuyer.
Some of the fees and costs can include:
1. An application fee.
You may find some lenders will charge you a fee when you have your application processed. This fee also pertains to when your mortgage renews.
2. An inspection fee.
An experienced building inspector can assess your potential home if you are looking at a resale property. This may be best before your offer is submitted and agreed upon.
3. Legal fees.
Portions of the paperwork will need to be handled by an attorney.
4. A property valuation fee.
The bank will complete a valuation to make sure your soon-to-be new home is eligible for the mortgage.
5. Closing costs.
This includes fees the seller is compensated for from prepaid amounts. It may include utility fees, property taxes, school taxes, and maintenance fees.
Outside of the categories listed, you will also need to consider increased property insurance, the expense of moving, a property survey, and a possible warranty fee if there is new construction. There may be a default insurance premium if the down payment happens to be less than 20 percent.
To make a comparison, a resale property can be 1.5 percent to 2 percent of the total purchase price whereas a new home could increase to 2.5 percent. You may incur $4,500-$7,500 in costs from a $300,000 property. And don’t forget about appliances and furniture as well as carpeting and decor.
Overall, ensuring you add in all of the added costs will help determine what you can afford and what is within your budget. Looking ahead will ensure you remain in the most ideal and comfortable position financially for as long as you have your home.