Common Fees When Buying A Home
First time home buyers saving for their down payment might want keep in mind the additional costs of buying a home so that the entire process goes a little more smoothly. There are many fees that go into purchasing a home that are not necessarily hidden fees, but fees that people are unaware of at first.
People usually think mostly about their mortgage – and calculate the loan amount they are taking out, broken down into the monthly payments. But what they don’t realize, is that there are more fees that come with the mortgage payment and the purchase of the home.
You typically have your earnest money – which is an upfront, good-faith fee that you do get back after closing, but you have to pay it upfront, and your down payment, the money that you will need to come up with at closing. Depending on your loan, your down payment could be 5 percent or 20 percent – it just depends.
Purchasing a home also requires inspections. I find myself explaining this to people a lot. You have your general building inspection, but there are other inspections as well; such as radon, termites, sewer lateral, and some others. These all start to add up and the money is due out of pocket during the contract period. These inspections are necessary so that you know what kind of shape
Fees At The Closing Table and Beyond
At closing you will also pay for your survey, lender fees and title company fees. You can get an estimate of these fees from your lender. Once you get your mortgage, then you have your property taxes and your home owner’s insurance.
A lot of people don’t think about property taxes. If you are looking in a certain area within the St. Louis region, the property taxes could be a lot higher than in other areas.. For example, the property taxes in Kirkwood may be a lot higher than property taxes in U City and other places.
So, property taxes and home owners’ insurance typically are put into your mortgage payment. If you thought your mortgage payment would be an $800 payment, now you know it’s a $1200 payment. So those are definitely some things that people don’t always realize on their own.
Some subdivision have a HOA fee – your home owner association, if there is one. Sometimes there is a neighbourhood pool or tennis courts and you could be paying up to $400 a year for the maintenance and use of those things. It just varies, and a lot of people don’t realize that they are looking into a subdivision where those home owner association dues are added in. And if you don’t pay those, they put a lien on your property.
There are some expenses in moving as well such as packing supplies, renting a truck and taking time off work if necessary. If you are moving into a place that is bigger than where you were before, you may have purchase furniture to fill the home or there might be new appliances to purchase as well.
I help my home buying clients understand all of these fees from the very beginning, so that there are no surprises. When you are saving up to buy a home, it’s good to know what these fees are and their approximate cost. If you are looking to purchase a home in the St. Louis or St. Charles area, please give me a call at 314-287-3661 to talk about your options.