Other Costs Associated with Buying a New Home
Buying a new home is at the same time stressful and exciting. Buyers should keep in mind that besides the price of the house there are some other costs associated with it. Knowing beforehand about those additional costs will give you a respite when your mind is already saddled with the hassles of buying a new home.
Agent’s Commission
When you are selling, your real estate agent will always be eligible for a commission, once a deal is reached. Generally, the commission is something in between the 2.6% to 6% of the price you get from selling your house. As a general rule the buyer’s agent will also get commission from the seller. The rate is however negotiable in both cases.
Closing Costs
Costs like property tax, legal fees, land transfer tax, and utility adjustment are included in this category.
Legal Fees
The payment of your lawyer for completing the legal procedures regarding buying a property. A lawyer typically performs the following duties: conducting a title search, registering a new title, reviewing the terms and conditions, preparing and signing a mortgage, determining adjustment costs, conveyance, and completing documentation.
Since there are many types of lawyers, you should find someone in real estate, or with home conveyance experience. When you are willing to having your documents drafted by a lawyer, it is wise to set a budget of about $800 to $1200.
Property Taxes and Utility Adjustment
In the final contract paper for selling a house there will be an adjustment date indicating from when the new buyer is taking the responsibility to pay property taxes. Generally, it is as same as the possession date. Condo fees and prepaid utilities need to be assessed, too. It is your lawyer’s task to assess how much you owe and to adjust it as part of the statement of adjustment or conveyance.
The Statement of Adjustment
A document showing the net result of purchasing a home. Deposit, legal fees, real estate commissions, property taxes, property purchase tax, and the purchase price are included in it.
There could be some other associated costs in addition to the closing cost:
Property Survey
A property survey in some cases is a must to get a mortgage. Banks use this survey to evaluate everything related to the property. A survey can cost you at least $1000.
Title Insurance
It’s an alternative to the property survey. This insures the title of the home against all odds, including: fraud or disagreement. The value and size of the property usually dictate the value. You can get relevant information about this from your lender or mortgage broker.
Interest Adjustments
This adjusts the cost of interest incurred between the closing date and the first payment date of the mortgage.
Home Inspection
To get a complete assessment of the mechanical and structural condition of the house, home inspection is essential. This investment will save you a fortune on future repairs. You will also not have to wait to know the sale price if you are willing to sell in the future. A home inspection on average will cost you about $100 per hour. And the required time is dependent on the age and the size of the house. It may take up to six hours to conduct a home inspection on an old mansion; for a condo which can be just an hour.
Appraisal Fees
In today’s market buyers have this tendency to find out whether they are paying the right amount to buy a home. Appraisal fees can cost you from $300 to $500.
Mortgage Life Insurance
In case the owner of a property gets severely ill or dies, this special insurance will work as a guarantee for that. Often lenders set it as a condition to be eligible for a loan.
Home Owners Insurance
After accepting an offer, arrange for homeowners’ insurance which includes both disasters and personal liability. To make a deal firm, often you will have to satisfy this condition.
Service Charges
Installation fee and other charges related to gas, electricity, cable service, and telephone are called service charges.
Moving Costs
Buyers often shy away from admitting that it’s a cost related to the new purchase. There are three factors to determine the cost of moving: time of the year, distance, and the amount of furniture. Moving on your own could be quite tricky and time-consuming. So, the best way to do this is getting quotes from different movers and comparing them to see who is offering you affordability and convenience.
Appliances
Before instrumenting a deal, have a close look whether there will be appliances in the home. If the answer is negative, you will have to buy them.
Fencing, Landscaping, Decks
Newly built houses usually don’t come with landscapes and fencing. And when you buy one, you need to complete them within the first couple of years. When you buy an older house, you will have to spend behind maintenance.
These are just some of the common additional costs of buying a home. There can be many more, like: re-keying locks and alarm system.
This is indeed stressful to have to break your bank to purchase a home. Even, selling a home is also costly. Besides, both of these endeavors will eat up a good amount of time from your schedule. And, we all know that time is MONEY.