While there a lot of great surprises in life…unexpected birthday parties, a scratch-off ticket win or meeting the love of your life on the Internet, there are also plenty of not-so-pleasant surprises that may come your way. If you’re lucky enough to be tipped off as to the existence of some of them, you can avoid running headlong into them.
When buying home, plenty of buyers – especially first-time buyers – can be caught unaware when they’re looking at the additional expenses involved in buying a home. These “hidden costs” can add up quickly, putting you in a less than ideal position. At Ernest Signature Custom Homes, we want to make sure you have all the information you need to make an informed decision about home ownership. If your goal is to own new construction in Savannah, GA or one of its surrounding communities, read on. We’re here to give you a heads up on some little known facts about the financial side of buying a new home.
Fees – What You Can Expect
- Government recording charges: To record your deed, mortgage and loan documents, state and local governments will each charge fees.
- Appraisal fee: How much is your home worth? You’ll need an appraiser to make that call, and you’ll foot the bill.
- Credit report fees: You’ll also cover the cost of the credit reports your lender had to pay up front to obtain.
- Title services and lender's title insurance: These fees are charged for services related to your home's title. They’ll also be passed along to you.
- Flood life of the loan fee: The government will monitor all changes in your property's flood zone status; you'll pay a small fee.
- Tax service fee: Although small, be ready for this fee that ensures that the taxes previously paid on the house or property are up to date.
- Lender's origination fee: This charge for processing your loan application can be pretty pricey. Here’s an example: If you score a $97,000 mortgage loan with an interest rate of 3.5% and no points, you’ll be responsible for $795.
- Attorney’s fees
You can't eliminate all fees, but certain fees can be waived or negotiated. Application fees, ranging from $100 to a few hundred dollars, are a good place to start. If you take the time to compare lenders, you may benefit by choosing the lender with the lowest closing costs, as long as the terms on each contract are similar.
Inspections and Surveys
Some purchases may require home inspections or land surveys to “close the deal” – especially if your lender requests them.
Taxes, Taxes, Taxes
You know that homeowner’s taxes are a part of the deal, but many buyers forget that a good chunk of those first taxes are due at closing.
Escrow accounts, which the lender uses to pay the homeowner's property ownership expenses outside of the mortgage, are required if your down payment is less than 20 percent. An escrow account allows your mortgage company to pay your taxes on your behalf. When you get your mortgage, it can be a shock to see at least a few months' worth of property taxes, a year's worth of homeowner's insurance and homeowner's association dues added to your first expenses as well.
Moving Expenses Can Add Up!
Will you need to hire movers, rent trucks, stay overnight in hotels or purchase airline tickets for the family? Will you need to purchase new furniture or replace items that are too difficult to move? Make sure you take these costs into consideration.
Utilities
Many community utility companies charge a set-up fee, or may require advance deposits. The cost of your monthly utilities will rise if you’re moving to a larger residence. You may also notice a jump in your monthly utilities if you’ll be picking up additional fees for services such as trash collection.
Insurance – Above and Beyond
All mortgages require that you purchase homeowner’s insurance. However, there are other insurances you may need to obtain before you can complete the purchase of your new house.
If you’ve put down less than 20% of the purchase price of your home, you will have to pay for
Private Mortgage Insurance, or PMI. If you default on your loan, PMI protects your lender. It’s an expected part of the mortgage process with a lower down payment, and the fee you pay can vary. Rules related to PMI are often complex, but most owners who owe less than 78% of the purchase price of their home are able to drop their PMI insurance.
Depending on where you live, you may be required to take out additional insurance to cover floods, wind damage, tornadoes and earthquakes. Make sure you’re ready to cover these expenses if necessary.
Hopefully you’re now in the loop about some unexpected costs you may face when you’re buying a home. If you still have questions, don’t hesitate to call our experts at 912-756-4135 or send us an
email. We’re more than happy to help you go through your purchase process and estimate the total costs.
