Being a first time home buyer in this market Denver is tough. However a little education goes a long way.Knowing what you’re paying for—like these 10 common costs—can ease that check-writing pain.
1. Earnest Money
To prove you’re “earnest” in your purchase commitment, expect to plunk down 1% to 2% of the total purchase price as anearnest money deposit. This amount can change depending on market factors. If demand in your area is high, a seller could expect a larger deposit. If the market is cold, a seller could be happy with less than 1%.
Other governing factors like state limitations and rules can cap how much earnest money a seller can ask for.
2. Escrow account
Anescrow accountis basically a way for your mortgage company to make sure you have enough money to cover related taxes andmortgage insurance. The amount you need to pay varies by location, lender, and loan type. It could cover costs for a few months to a year.
Escrow accounts are common for loans with less than a 20% down payment and mandatory for FHA loans, but it’s not required forVA loans.
The origination fee is a hefty one. It’s the price you pay the loan officer or broker for completing the loan, and it includes underwriting, originating, and processing costs.
The origination feeis a small percentage of the total loan. A typical origination fee is about 1%, but itcan vary. Use your good-faith estimate to shop around.
You want to be assured your new home is structurally sound and free of surprises such asleaks or pests living in the walls. Those assurances come with a price.
Home inspection: This iscritical for home buyers. A good inspector will be able to notify you of structural problems, flooding issues, and other potentially serious problems. Expect to pay $300 to $500 for a home inspection, although cost varies by location.
Radon inspection: An EPA-recommended step, this inspection will determine whether your prospective home has elevated levels of the cancer-causing agentradon. A professional radon inspection can cost several hundred dollars.
Pest inspections: Roaches are one thing. Termites are awhole different story. Expect to pay up to $150 for a termite inspection.
Some states, such asGeorgia, require an attorney to be present at closing. In some other areas, this is optional. If you use a lawyer, expect to cover the costs, which vary by area and lawyer.
It’s typical for mortgage companies to have a lawyer on their end, although they should cover the bill.
6. Credit check
Just because you can getyour credit report for freedoesn’t mean your lender can (and it willactually pull all three). You have to reimburse the lender, usually around $30.
7. Extra insurance
If you live in a hazard-prone area, you might need to purchase extra insurance, like forflood.
Your lender won’t loan you money for a home without knowing what its fair market value is. An appraisal will cost $200 to $400, depending on location and property size.
9. Title company
You pay this to the title company to make sure the property’s title is free and clear. Your lender will recommend a title company, but you can alsoshop around for one.
It’s not required in all instances, but your lender may require a professional surveyor to determine exactly where your property lines are drawn. Prices vary widely, but expect to pay at least $100.
Remember: You have bargaining power. Shop around to get a feel for what rates and fees apply in your area. If you aren’t sure what a lender is charging, ask foran explanation—the charge might not be set in stone. If you’re unhappy with a charge, negotiate.
Michael Kane is a Broker Associate at Keller Williams. He is a member of the ColoradoHomeClick Team that is recognized locally and nationally as in expert in real estate. Locally he is a member of theDenverMetro Association of Realtors. Nothing brings him more joy than making his client’s dreams become a reality! For more information feel free to contact him or call 303-717-9284.
Information provided by realtor.org. Image courtesy of google.com
Author:Jason Peck Phone: 720-446-6301 Dated: February 26th 2015 Views: 862 About Jason: ...
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