Congratulations, you are ready to buy a home! The purchase price is easy to find, but there are other costs associated with a home purchase, especially if you are financing the transaction. These are some of the most common costs in a purchase transaction.
Lender Fees. These fees are paid directly to the lender at closing. Many of them will include origination charges (processing, underwriting and cost for the rate). Government loan programs also have additional fees, such as upfront mortgage insurance premiums for FHA loans and funding fees for VA loans.
Third-Party Fees. The fees are paid to nonaffiliated vendors in the transaction, and some, such as the appraisal fees, must be paid up front at the beginning of the transaction. Title and escrow companies also charge fees for their services.
Attorney Fees. These are also an associated cost in states that require attorneys to be present and review documents at closing.
Home Inspection Fees. These are often not mandatory but should be strongly considered for such a large investment. Paying for a home inspection will give you a much better idea of the condition of your home, such as the plumbing, foundation and sewage system.
Reserve Requirement. Reserve requirements are not fees but are still costs in the home-buying process. If you are impounding (escrow) your taxes and insurance, there has to be enough in the account to pay your tax and insurance bills when they are due. Depending on the time of year your loan closes, this could be a significant cost. Your mortgage payment will take smaller portions monthly that will later be applied to your taxes and insurance, but you will still need to pay money at closing to ensure adequate funds.
To learn more about the specifics of these costs, call or email me, and I will go over the details.