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Know the costs associated with buying a house

On Behalf of | Nov 21, 2016 | Business Law

Buying a house in a new neighborhood is one of the most exciting things you can do. Your home may also be your biggest investment, and it’s important that you prepare for the responsibility that comes with it. No longer can you call your landlord to fix appliances and common problems, but the pride that comes from owning your own home more than makes up for it.

The cost of the house is only one of the things you should look at when you are determining which house to buy. Some new homeowners get in over their heads without realizing all the costs associated with the purchase. Here are a few to watch for when you are setting your price limits and budget.

Home inspection

Before you close on your house, your mortgage insurance company will want to inspect the home to make sure everything is up to par and in good shape. According to the U.S. News and World Report, these inspections may cost several hundred dollars. While the cost may be unexpected, it’s also worth paying to have the peace of mind that there are no serious problems with your home.

Origination fee

The origination fee is the money the lender charges for processing your new loan application. This is usually compensation for handling the loan. Most often, the fee is calculated as a percentage of the total loan amount. In the United States, origination fees usually fall between .5 and 1 percent.

Appraisal fee

A seller can’t just pick an arbitrary number and decide to sell the house for that much. The house must be worth what they are asking for, and in order for you to secure a loan through the bank, it must meet a certain threshold. Typically, an appraiser will be called out to determine if the house is worth what you are paying for it. If it doesn’t meet the required amount, then the loan may be denied and you may want to move on to another property.

Property taxes

You can either pay taxes at closing or set up payments through your escrow account and pay yearly through your mortgage company. While this may seem like the better option up front, it also means your monthly payments will go up. Escrow can be a very confusing part of the loan process, so you may want to discuss this with a professional before signing.

Owning a home is a big step, but one that is exciting for any family. If you have questions about the fees associated with buying a house, an attorney may be able to answer your questions.