13 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 budget 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 checklist 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 $175 -$ 300.
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
mortgage 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. 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), it 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.
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