Planning on buying a home? Here are the 9 costs associated with the home buying process that you need to be aware of.
- Down Payment
- Lender-based origination, underwriting, and application fees.
- Title-based fees
- Survey and appraisal fees
- Recording fees
- Pre-paid property taxes, homeowners insurance, and mortgage interest.
- PMI (Private Mortgage Insurance) if applicable
- Escrow fees
- Home inspection fees (pest, mold, general inspections, etc)
- Down payment
The standard down payment for a home is 20% however, you often can get a loan with less money down. If you choose to go with the less money down the route, you will find that you face an increased cost of borrowing, which includes higher monthly costs.
*Note: The idea is to put as much money down as possible without draining your resources for general living expenses, etc…
- Lender-based origination, underwriting, and application fees.
An origination fee is often paid to the bank of the lender for their services when creating the loan. You will likely owe an underwriting fee, and will probably be required to cover the cost of your credit report. *Note: In some instances, you may choose to pay upfront discount points (likely 1% of the loan) to lower your interest rate and monthly payment. If you choose to do so, you will pay these points to the lender at closing.
- Title-Based Fees
Plan to pay for several fees related to taking the title of your new home.
These charges include:
- Title Search
- Title Insurance Binder
- Title Settlement
- Title Insurance
*Note: The cost of title insurance is rolled into your closing costs, and can be financed into the loan.
- Survey & Appraisal Fees
Land Survey: In the event, a new survey of the land associated with the home you are buying needs to be conducted to establish property boundaries, you’ll need to pay a surveyor.
Appraisal: An appraisal will likely be required by your mortgage lender. They want to confirm the value of the home you are buying. You pay for the appraisal up front to the lender prior to the appraisal being conducted.
- Recording Fees
Be prepared to pay for fees related to the recording of the deed, and sale-related documents with the county. A transfer tax will also be collected at the close of escrow.
- Pre-paid property taxes, homeowners insurance, and mortgage insurance
Property taxes: You can expect to pay for at least 12 months of homeowner’s insurance upfront (if utilizing a mortgage) and six months of taxes. You will also need to pay insurance on your loan for each remaining day of the month (if applicable).
- PMI (Private Mortgage Insurance)
In the event your mortgage lender requires you to purchase mortgage insurance, you will need to pay PMI. Mortgage insurance will be required on FHA and USDA loans and may be required if you are putting down less than 20% on a conventional mortgage.
*Note: In some cases, you can have the upfront PMI premium rolled into the loan.
- Escrow Fees
If obtaining a mortgage to buy your home, you will likely have a portion of your monthly payment go into escrow to pay for property taxes and insurance. You are prepaying a portion of the property taxes and insurance on the property you are buying.
- Home Inspection Fees
In most instances, you are going to want to have certain inspections conducted on the property you are buying which can include:
- General inspection
- Mold inspection
- Pest inspection
*Note: In today’s hot market, many sellers are having these inspections conducted prior to their homes hitting the market. In the event, the inspections have been conducted by reputable sources and meet yours and your lender’s requirements, you may choose to waive conducting your own duplicate inspections as a buyer to further increase the likelihood your offer will be accepted.
Other fees you may encounter
- Flood insurance: if you are buying a home in a flood-prone area
- HOA Fees: only in the event your property is within an HOA. These fees can include dues, processing fees, and transfer fees.
- Home Warranty: Some buyers choose to purchase a home warranty your protect your home and its systems. This cost would be charged during closing.
📲(415) 259-8088
💻www.thriveinmarin.com
Torben Yjord-Jackson – Realtor
EXP Realty of CA, Inc.
CalBRE 02050831
