For homebuyers, especially first-timers, making that purchase is both an exciting and adventurous time. At Raleigh Cary Realty, we know all about that as we help buyers and sellers navigate the process. For that reason, we are here to discuss some of the hidden costs that come with purchasing a home. We are happy to help and work with many awesome mortgage brokers who can help with your specific closing cost as they apply to you when needed.
Below is a list of costs to keep in mind when making an offer to buy:
- Home Inspection: As a buyer, it’s important to make sure that you aren’t hit with any surprises that could cost you a fortune after purchasing. To prevent that, hire a certified home inspector to examine the property before closing. Uncovering hidden structural, electrical, plumbing, HVAC or other issues can allow buyers to negotiate with the seller. Home inspections are paid upfront by the buyer and are non-refundable. It’s not mandatory, but buyers absolutely should choose to do it. The cost varies based on location and the person doing the inspection.
- Appraisal Fees: Most mortgage lenders want to be assured the purchased home is worth the amount of the loan. They will require the buyer to pay for a certified appraiser to assess the property value of the home. Once again, this is an upfront fee the buyer must pay and is non-refundable.
- Closing Costs: Closing costs go towards paying costs such as the loan origination fee, title insurance, surveys, attorney’s fees, taxes and even HOA fees. They generally run between 2%-5% of the purchase price.
- Mortgage Points: Many borrowers looking for a lower mortgage rate choose to pay mortgage points. Doing this will discount the mortgage percentage, but it costs more out-of-pocket up front. Generally, discount points cost 1% of the total loan amount. For example, 1 point on a $200,000 loan would cost $2,000. It will cost more in the beginning, but it will lower the monthly payments.
- Pre-Funding the Escrow: Lenders require buyers fully fund the escrow account on a mortgage to cover the first year’s property taxes and insurance. There will likely be a requirement to maintain extra funds in case the taxes and insurance are higher than estimated in the next year.
By being aware of these hidden costs, buyers can be more informed when making decisions. For more help, contact us today. We look forward to assisting you through the buying or selling process.