Hidden Costs to be Aware of When Buying a Home
One of the top draws to homeownership, among many, is the fact that mortgage payments are often much less expensive than rent. However, just because a mortgage payment is less than your current rent does not necessarily mean that buying a home would be cheaper. There are numerous costs to consider when deciding to buy a new home.
Loan origination fee
To start, there will be a loan origination fee whenever you take out a mortgage. This is what you pay the lender for doing the work involved with making the loan. Since this fee can be a large one and it is required to be paid upfront to your lender, it’s important that you figure this origination fee into your total cost calculations. Although the exact amount you pay can vary based on the amount of your mortgage loan and the specific lender with which you work, you can expect to pay between .5 percent and 1 percent of the total value of your mortgage to cover this fee.
Another one of the commonly overlooked costs associated with homeownership comes in the form of insurance fees. Renters insurance is a relatively inexpensive form of coverage that you might not even need to cover, depending on where you live. When you purchase a home, however, you sign up for several new insurance requirements. You will be buying lots of different kinds of insurance, including title insurance, homeowners’ insurance and (possibly) additional flood insurance. Homeowners’ insurance may cost you upwards of $1,000 annually, although this amount can be much more depending on the extent of your coverage and where you purchase your home.
Closing costs will encompass a number of things, including appraisal costs. Once you have closed, you’ll be able to move into your new place. Moving costs money. If you’re going from an apartment to a house with a yard, you’ll need things like a lawn mower, a snow shovel and tools that you never needed before — all that great Home Depot stuff. Thankfully, there are many resources available online, including full lists of essential household items that most homeowners need at some point.
eXp Realty—The Results Team—is ready to help you buy or sell your home! Stop on by our location at 2623 N. Walnut St, Bloomington, IN 47404. Or call us at: (812)822-2746.