Thursday October 1, 2015
When you’re looking to purchase a new home, it’s important to think about how much home you can afford. The charges associated with the home buying process entail more than just the purchase price of the home, so make sure you take all of the expenditures into consideration when you begin searching. Read on to learn more about the costs associated with buying a new home.
What are Some of the Various Fees You Encounter When Closing on a Home?
Closing on a home brings up several fees, such as:
- A credit report fee for your lender to obtain your credit report
- A tax service fee to verify that the taxes previously paid on the home are not late
- A flood certification fee to identify whether or not your property is located in a flood zone. If it is, you’ll need flood insurance on your property.
- A flood life of the loan fee so that the government can monitor changes in the property’s flood zone status
- Government recording charges to cover the cost of local and state governments to record your deed as well as loan and mortgage paperwork
- Lender’s origination fee to process your application for a loan
- Fees for lender’s title insurance and title services related to the title of your home
- Homeowner’s insurance
- Transfer taxes, which are taxes imposed upon the sale of the property to change the title from one owner to another.
How Much Does a Home Inspection Cost?
When purchasing a home, most mortgage lenders require the buyer to get the home inspected first. This inspection will make sure that the home meets all state requirements and complies with all of the building codes required by your state. Home inspections can cost anywhere between $300 to $500.
If you’re building your new home from the ground up, the inspector can watch every step of the construction of your home and give you reports. This option is more expensive, but it’s a great way to make sure that everything is being done exactly as it should be.
At the end of construction, you can take the punch-list of any neglected items and take them to your builder to complete during your builder walk-through prior to closing.
What Are Survey Costs?
Some lenders demand that the buyer has a professional survey of the property performed before closing. This way, you, your neighbors and the lender will know exactly where your property’s boundaries are. Survey costs run a minimum of a couple hundred dollars. The beauty of purchasing a new construction home is that the builder will have any documentation needed from your lender and save you this expense.
How Much Are Escrow Costs?
While almost everyone has heard the word “escrow”, few fully understand what it really means. A lender often uses an escrow account to pay for the new homeowner’s property ownership costs that are unrelated to the mortgage. Just about every home buyer with a down payment that is less than 20 percent of the home’s value will use an escrow account. This account allows the mortgage company to pay taxes on your behalf so you aren’t saddled with property tax bills two times each year.
What exactly is your escrow account compiled of?
In most cases, your escrow is used to pay specific fees such as:
- insurance or property insurance
- your mortgage insurance
- city and county taxes
- your HOA dues, if applicable
Let Smith Douglas Homes Help You Navigate the Home Buying Process
Don’t feel discouraged if you find any of this information confusing; the New Homes Specialists at Smith Douglas Homes are ready to help you navigate all of the costs associated with purchasing a home. Contact us today to start the search for your next home. For more information, explore the 10 Benefits of Buying a new Home vs. an Older Home.