When you’re buying your first house, you likely think that the only expense you need to cover is the cost of. The house itself. While you’ll need to finance the bulk of the purchase, there are a few extra fees that new home buyers face throughout the homebuying process. These are the most common ones you need to be ready for so you can keep your finances on track.
The Down Payment
Making a down payment on your new home is the best way to secure a mortgage that offers low interest rates and affordable monthly payments. The larger your down payment is, the smaller your monthly payments will be over the life of the loan. As a general rule, it’s best to pay at least 20 percent of the home’s sale price toward the down payment. You can pay less, but you’ll have to pay for private mortgage insurance if you do. This added expense can put strain on your monthly budget if you’re not careful.
Appraisal and Inspection Fees
One of the biggest mistakes new home buyers can make is to skip the home inspection. While you’re able to waive the home inspection contingency to make your offer stronger, you still need to know what condition the property is in. You’re responsible for the cost of the inspection but this means you’re also able to choose the inspector based on price and quality of their work. You’re also required to cover the cost of the appraisal for the lender. The amount you’ll pay depends on the lender so feel free to ask before you accept the loan.
As a buyer, you’re responsible for certain closing costs for your loan. These costs help cover fees associated with generating the loan, title insurance, state recording fees, and other expenses associated with transferring the property into your name. The exact costs you’ll pay will vary based on where you’re buying the house, how much the house costs, and the type of loan you’re taking out. The best thing you can do is discuss the closing costs with your lender prior to accepting the loan.
Talk to Your Lender
Before you start worrying about how you’ll pay for the expenses new home buyers face, talk to your lender. They’ll be able to walk you through the costs you’ll have to pay and can give you a better estimate for each cost based on the homes you’re considering. Need to find a lender you can trust? Apply online today.