Whether you're looking to buy your first home, or trading up to a larger one, there are many costs on top of the purchase price and the down payment you must figure into your calculation of affordability. These extra fees, such as taxes and other additional costs, could surprise you with an unwanted financial nightmare on closing day if you're not informed and prepared.
Some of these costs are one-time fixed payments, while others represent an ongoing monthly or yearly commitment. Not all of these costs will apply in every situation, however, it's better to know about them ahead of time so you can budget properly.
Remember, buying a home is a major milestone. Whether it's your first, second, or tenth home, there are many important details to address, during the process. The last thing you need is unbudgeted financial obligations cropping up hours before you take possession of your new home.
Read through the following checklist to make sure you're budgeting properly for your next move.
1. Appraisal fee
Your lending institution will request an appraisal of the property which would be your responsibility to pay for. Appraisals can vary in price from approximately $350 - $650.
2. Property taxes
Depending on your down payment, you or your lending institution may decide to include your property taxes in your monthly mortgage payments. If your property taxes are not added to your monthly payments, your lending institution may require annual proof that your taxes have been paid. Also depending on the type of loan, you are doing and where you are your lender might require 3-6 months' worth of taxes to be held in an impound account in case of any delinquency. This will be an upfront cost to the buyers so make sure to budget for this in your closing costs.
3. Survey fee
When the home you purchase is a resale (vs a new home), your lending institution may ask for an updated property survey. The cost for this survey can vary between $700- $1,000. This will vary depending on where your home is located and the amount of property that you are purchasing.
4. Property insurance
Homeowners insurance covers the replacement value of your home (structure and contents). Your lending institution will request proof that you are insured as it protects their investment on the loan.
5. Service charges
Any new utility that services your hook-up, such as telephone or cable, may require an installation fee
6. Legal Fees
Even the simplest of home purchases should have a lawyer involved to review all paperwork. Shop around, as rates vary greatly depending on the complexity of the issues and the experience of the lawyer.
7. Mortgage Loan Insurance Fee
Depending upon the equity in your home, some mortgages require mortgage loan insurance. This type of insurance will cost you between 0.5% -0.85% of the total amount of the loan amount. Usually, payments are made monthly in addition to your mortgage and tax payment.
8. Mortgage Brokers' Fee
A mortgage broker is entitled to charge you a fee in order to source a lender and organize the financing. However, it pays to shop around because many mortgage brokers will provide their services free or discounted to you by having the lending institution absorb the cost.
9. Moving Costs
The cost for a professional mover can cost you in the range of:
- $50-$100/hour for a van and 3 movers
- 10-20% higher during peak demand seasons.
This can be costly and you want to make sure to hire a reputable company.
10. Maintenance fees
Condos charge monthly fees for common area maintenance such as groundskeeping and carpet cleaning in hallways. Costs will vary depending on the building. Also, some homeowners associations charge a new owner or move-in fee depending on what community you are purchasing in and these fees can vary from a few hundred dollars to thousands of dollars so make sure to check on this when buying a home.
As a home buyer, you will want to do all of your own investigations in regard to the livability and condition of the property.
While we recommend that all of our buyers start with a general home inspection this is not the only inspection you should consider especially if the home inspector points out some other areas that you need to focus on. These include but are not limited to roofing, plumbing, electrical, mold, asbestos, radon, geological survey, foundation, and many more.
If the home you purchased is serviced by a well, you should consider having your water checked by your local experts. Also if the property is on a septic system you should make sure that has been certified by a professional as well.
12. Local improvements
If the town you live in has made local improvements (such as the addition of sewers or sidewalks), this could impact a propertyâ€™s taxes by thousands of dollars. In California, these are known as Special Assessments or Mello Roos Taxes.
13. Land transfer taxes
These are charged by either the city, county, or state. These will vary so make sure that you are aware of any applicable taxes that will have to be paid in order to purchase the home.
If you have any questions about any of these points, don't hesitate to call us at 714-844-5696.