There is more to buying a home than knowing the house’s price and the interest rate you will get on the mortgage loan. Although knowing those things are key, there are other things you must consider before committing to the purchase, most importantly, the fees associated with purchasing the home. Some fees you will pay in the process of buying a home, others you will pay as part of your mortgage.
Most of these fees cannot be avoided, so it’s important you know as much as possible about them. With this in mind, here are eight fees to look out for when buying a home.
It is standard practice to get professionals to survey the condition of the property you are interested in buying. Professional surveys prevent you from buying the wrong home and, in some cases, can provide valuable information that you can use to negotiate a fair price. However, they don’t come free, and in some cases, can be pricey.
On the other hand, appraisal fees are fees paid for a professional appraisal of the home. Lenders often request an assessment of the property because it helps them decide if they are worth the investment. The thing with appraisal fees is that you might have to do more than one appraisal, so you might get to pay them more than once.
Inspection fees are quite similar to the fees above; the only difference being that inspections are not always required when buying a home. However, they are essential because they help you determine the presence or absence of potential problems like termites and vermin. It is best if you did a general inspection and a pest inspection to avoid significant damage in the future. The latter is necessary when you are looking for information about past damage that could compromise the foundation or structure of the property you want to buy.
When looking to buy a home, you should expect to pay any fees related to the property title’s ownership. You will also get to pay for a title search, title settlement, title insurance binder, and title insurance. Sometimes, the title insurance fees are added to the closing costs, and other times the loan covers them.
An escrow account is used to keep your money while you finalize the agreements with the seller. This account is also where some of your mortgage payments go to. The escrow account is vital because it ensures that you pay for your property taxes and insurance when due. The escrow fees service the escrow account, and of course, they are your responsibility.
The term conveyancing refers to the legal process that is part of buying a home. Conveyancing fees often take the form of legal fees or disbursements. The legal fees are demanded by the solicitor or conveyancer who does the necessary legal work. The disbursements cover things like local searches and the registration of change of ownership with the appropriate quarters. The amount paid as conveyancing fees depends on the property’s value, the number of local searches done, and the kind of conveyancer you engage.
You can expect to pay some fees related to the mortgage needed to finance your buying of the home. One such fee is the mortgage valuation fee, which is optional (not all lenders charge them). Then there are the mortgage arrangement fees, which are often demanded by mortgage companies. You might have to pay upfront or have it added to the loan. It all depends on what the lender wants.
Real Estate Agent fees
Here is one fee you should be wary of because you have no business paying it, all things being equal. The seller often covers estate agent fees. That is the way it should be. However, there is such a thing as “sale by tender,” where an estate agent might try to get you to pay their fees.
Document preparation fees
As the name suggests, these are the fees you pay for getting some of the documents needed for buying the house, such as the loan estimate. Document preparation fees to cover the sundry costs for preparing these documents. They are flexible, negotiable, and often vary depending on the parties involved in procuring the home. Some mortgage lenders even offer to include them in the loan.
Homeowners Association (HOA) fees
There are some instances where you might need to join a homeowner’s association, especially when condos or townhouses are involved. These kinds of associations are created for many reasons: maintaining the homes and areas within the association’s jurisdiction being one of them. HOA fees are often monthly and are generally used to pay for the management of common areas and the buildings. The amount paid as HOA fees varies from property to property and state to state too.
Now that you know some of the fees you might need to offset before you get to buy that house of your dreams, here’s a quick tip. These fees are subject to state laws, so they may vary depending on the state you are buying the house in. That is an excellent development, by the way, but you are better off being aware of these fees so that you don’t get blindsided by any of the parties involved in the process of buying your home. Hopefully, after reading this article, you will make better, more informed choices should you choose to buy a home.