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Home Buyers: Closing Costs You Might Not Know About |
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If you're home shopping or in the process of buying property,
you want to make sure you have all your costs covered.
Home buyer's who purchase a home without a real estate agent (or
sometimes purchase through an inexperienced agent) can find out
too late they don't have enough money to close and move.
10 most overlooked costs home buyers miss:
1.) Property Taxes and Assessments
Home buyers often need to set up an escrow account with the new
mortgage lender. This means that they must pay a portion of
taxes upfront. In some states, the seller has already paid the
local taxes and this amount must be paid back to the seller at
closing. Also, some counties have transfer taxes whenever a
property changes hands. 2.) Insurance
Fire insurance or a homeowner's insurance policy usually needs
to be paid for up front. Although you may be able to get an
insurance binder from your company on a payment plan, most
mortgage companies require the first year paid during escrow or
closing.
3.) Appraisal Fees
Mortgage lenders require appraisals to make sure your property
covers your loan amount plus their investment risk. The buyer
normally pays between $150-$450 to the appraiser.
4.) Survey Fees
Some lenders require a property survey. You may also want a
survey if the property lines are in question. |
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Survey fees vary
from $600-$2,500, or more for large parcels.
5.) Septic System Certification
If your new property does not connect to public sewers, you may
need a septic clearance for your lender. Often the home seller
pays this cost, but you want to make sure you get no hidden
charges or surprises.
6.) Water Quality Certification
The same holds true for properties with a well and not public
water service. For your own piece of mind, you will want to
check the water quality and have this clause as a condition in
your purchase contract. Not only do you want to make sure the
water quality passes, you want to make sure the well has plenty
of flow so you don't run out of water.
7.) Miscellaneous Origination and Loan Fees
Your mortgage lender adds fees for processing your loan,
document preparation, underwriting, closing, funding, and
sometimes "garbage fees." Check your estimated costs statements
and look for hidden fees. Before committing to a lender, shop
for your best loan and compare lender's costs.
8.) Association and Maintenance Fees
Most buyers understand that a condo comes with association fees.
However, some housing developments also charge maintenance fees.
Don't assume that the fees will be nominal. Many condos in
California have association fees over $400 per month. Some of
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fees need to be paid annually, which means a home buyer
needs to pay upfront.
9.) Utility Service Fees
Check your hook up and installation fees for water, gas,
electricity, cable or satellite TV, phone, trash, sewer and
other services. Sometimes the water department covers the sewer
and trash service. These fees quickly add up and you don't want
any surprises like a $340 water deposit required by some
companies.
10.) Moving Costs
Plan your move before committing to a purchase. Know whether you
can move yourself or need to hire professional movers. You may
be shocked to find out the costs involved. Ask for referrals of
clients and check out moving companies. Prices for truck rental
and moving companies vary.
Make sure you have all your purchase and moving costs covered
before you make an offer to purchase a home. You don't want to
find out when it's too late that you need more money.
Copyright © 2005 Jeanette J. Fisher. All rights reserved. (You
may publish this article in its entirety with the following
author's information with live links only.)
About the author:
Jeanette Fisher teaches first-time home buyers and beginning
real estate investors the six steps to home financing. FRE.E
Ebook, "Credit Tips for Mortgage Financing."
http://www.recredithelp.com
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