There are many hidden costs that may sneak up on you when buying a home, especially if you are not careful. A mortgage estimator will help decrease your chances of running into some of these hidden fees by allowing you to get a solid estimate on what you are presumably going to pay for your future home. Here are some hidden costs that may be present when buying your next home.
1. Earnest Money
Before you even sign any papers, the sellers will typically ask you for earnest money. Earnest money shows that you are a serious buyer, basically showing that you aren’t a flake.
This type of money can range from around $500 to $1,000 depending on the area and price of the home that is at stake. Typically, you will get the money back or it will go towards the house, so don’t stress too much over the little bit of extra cash you may be spending. Think about it, wouldn’t you want a little money to help make you certain that a buyer is really interested? Many people nowadays will say they are interested and then bail, so spending an extra $500 will entice most buyers to follow through and purchase the home that they are interested in.
2. Closing Costs
Closing costs include just about everything that closes out a real estate transaction. They include mortgage origination fees, title insurance, recording fees, etc, which will add up to about two to five percent of the overall cost of the home.
These fees vary from market to market and vendor to vendor, so don’t think there is one set fee that you will pay in the end. The fees may seem small at first, but after a bunch of them, you may be shelling out some extra cash you didn’t think you needed to spend. You may roll the closing costs into the loan, which will save you from that immediate payment, but understand that there is no free lunch. You will pay no matter the case, there is no opting out.
3. Property Tax
One of the biggest fees that will vary from state to state is property taxes. Many people may forget that you have a property tax among the excitement of buying a new home, but don’t be fooled, you will have to pay all taxes no matter what.
Some instances may seem tricky when it comes to property tax. One instance is when you buy your home and then a few months later, the price is re-evaluated and priced higher than it was when you bought it. It may seem great, but just know that that means you will have to pay even higher taxes even though you bought the home at a price that you liked. This case may or may not happen to you, but just know that it can and you may be at a time in your life when you are spending a lot of money on furniture and other appliances for your home. Don’t forget property taxes and set a little extra money aside just in case you run into some sticky situations that you don’t want to deal with.
Before you head on to buy a home, make sure you have a look at the above pointers to avoid hidden costs. Now that you know the kind of costs that might be involved, we are sure you will be able to make an informed decision.
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