Unexpected Costs In Purchasing A House

Reblogger Chuck Carstensen
Real Estate Agent with RE/MAX Results 20344949

Looking to buy your first home or has it been a while since you purchased your last home?  One big potential cost for a buyer is the closing costs.  Don't the seller pay those you may ask?  Yes, often we can NEGOTIATE the closing costs into the offer.  However, there are some situations were the sellers won't negotiate the costs into the price, so its good to be aware of how much closing costs will before you make an offer on a home.

Original content by George Souto NMLS #65149

When First Time Buyers are preparing to purchase a home they usually only focused on the downpayment, and are surprised to find out there are other funds required to purchase a property.  These Unexpected Costs In Purchasing A House can some times cause especially First Time Buyers to become discouraged and postpone their home buying search.  Therefore, it is important to discuss all funds required to purchase a property as early in the process as possible.

The most common costs First Time Homebuyers do not think about are Closing Costs.  Closing Costs not only come as a surprise to First Time Homebuyers, but the total amount of the Closing Costs can be a major shock. Yes, there are ways to cover Closing Costs without the Borrower(s) using their own funds, such as Downpayment & Closing Cost Assistant Programs (DAP), but the shock of hearing about these costs for the first time can really be sobering.

I am always prepared for this initial shock, and I know I have to take the time to fully explain these unexpected costs.  When Closing Costs are explained correctly, and Borrowers understand them, the initial shock normally goes away.  

The bulk of Closing Costs are not Lender Fees.  The bulk of the Closing Costs are third party fees which are mostly fixed fees, and generic to all mortgage loans.  The exceptions would be funds required for escrows, points, and prepaid interest which fluctuate based on the price of the property. As a result the percentage of Closing Costs are higher on lower price properties than on higher price properties. 

Below is a list of the Closing Costs most common to all mortgages.

  • Application Fee/Processing Fee
  • Appraisal Fee
  • Attorney Fee
  • Title Insurance Fee
  • Recording Fees
  • Daily Interest Charge
  • Homeowners Insurance
  • Escrows:
    • Taxes
    • Homeowners

There could be other Closing Costs which are less common such as:

  • Points
  • Credit Report
  • Flood Certification
  • Funding Fees
  • Condo Questionnaire Fee
  • Re-inspection Fee

These costs can easily add up to several thousand dollars regardless of the loan size, because as I stated before most of these Closing Costs are fixed cost.  When First Time Buyers hear about these Unexpected Costs In Purchasing A House for the first time it is understandable why it can be really daunting for them.  But as shocking as hearing about Closing Costs can be, finding out about costs they will incur before the Closing can be equally if not an even bigger shock.  I will cover these costs in my next blog "Unexpected Up Front Costs In Purchasing A House".

 

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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Rainmaker
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William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Many of the unexpected costs happen after the sale when maintennce is needed.

Jan 21, 2014 05:16 AM #1
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Chuck Carstensen

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