It’s no secret that buying a home is a substantial financial commitment. But what many people don’t realize is that there are closing fees and closing costs that can add up quickly! This article will discuss some of the most common closing costs and closing fees to consider when saving for a home. By being aware of these expenses, you can plan ahead and make sure you have enough money saved up to cover them.
Home Inspection Fee
A home inspection is a vital part of the home buying process, and it allows you to have a professional assess the property’s condition and identify any potential problems. The cost of a home inspection varies depending on the size and age of the home. However, closing costs like this typically ranges from $200 to $1,000.
Appraisal Fee
To get a mortgage, most lenders will require an appraisal of the property. This is one of the closing costs to hire a professional appraiser to evaluate the property’s value. The exact amount will vary depending on the location and size of the property, but it is typically between $300 and $500.
Deposit
Once you have an offer accepted on a home, you will need to put down a deposit. The deposit amount varies, but it is typically around 5% of the purchase price. For example, if you buy a $200,000 home, your deposit would be $10,000. This money is held in escrow and is applied to the home’s purchase price at closing.
Land Survey
If you buy a home with a mortgage, the lender will require a land survey. This fee covers the cost of having a professional surveyor come out and measure the property. This ensures that the property boundaries are accurate and that there are no encroachments. The cost of a land survey is usually a couple of thousand dollars.
Legal Fees
There are many legal documents involved in the purchase of a home. These documents can be reviewed by a lawyer or notary so that you understand what you are signing. The closing cost of legal support may vary depending on the complexity of the transaction and which city you live in.
Land Transfer Tax
In some provinces or states, you must pay a land transfer tax when you purchase a property. These taxes are based on a percentage of the purchase price and vary depending on the province or state in which the property is located. This closing fee is commonly overlooked but should always be taken into consideration.
Mortgage Default Insurance
If you are putting down less than 20% of the home’s purchase price, your lender will require you to have mortgage default insurance. This insurance protects the lender in case you default on your loan. The premium is typically added to your mortgage and is paid as part of your monthly payments. The closing cost of mortgage default insurance varies depending on the amount of your down payment, but it is typically between 2%-4% of the mortgage value.
Mortgage Life Insurance
Mortgage life insurance is not required, but it is an option that some people choose to purchase. This insurance pays off your mortgage in the event of your death. The cost of mortgage life insurance varies depending on the amount of coverage you buy and your age.
Title Insurance
Title insurance protects you from any potential problems with the property’s title. This can include errors in the public records or undisclosed liens against the property. The cost of title insurance is typically a few hundred dollars.
Homeowners Insurance
You are responsible for paying homeowners insurance and property taxes when you own a home, and this protects you in case of any damages to your home or if someone is injured on your property. This is a closing fee that varies depending on the location and value of your home.
Utilities
As a homeowner, you’ll be responsible for paying for all the utilities associated with your property. These utilities include electricity, gas, water, sewer, and trash service. The cost of utilities can vary depending on where you live and how much energy you use.
Moving Costs
Don’t forget to factor in the cost of moving when you’re saving to buy a home. If you hire professional movers, the cost can be several thousand dollars. Even if you rely on yourself to move, there are still costs associated with renting a truck and buying packing supplies.
Appliance Installation Fees
If you need to buy any new appliances for your home, you’ll also have to pay for installation. This can include things like washers, dryers, dishwashers, and refrigerators. Installation fees can vary depending on the type of appliance and the complexity of the installation.
New Home Warranties
When you buy a new home, it will likely come with a warranty from the builder. This warranty is considered a closing cost, and it covers any defects in workmanship or materials for a certain period. The cost of a new home warranty is typically a few hundred dollars.
Furniture and Decorating Expenses
Once you move into your new home, you’ll need to buy furniture and decor to make it feel like your own. Large pieces of furniture can cost a few thousand dollars, and smaller items like rugs and lamps can add up. You may also want to hire a professional to help you with the decorating. The cost of furnishing and decorating your home can vary depending on your taste and budget.
Landscaping
Once you move into your new home, you may want to do some landscaping. This can include things such as planting trees, shrubs, and flowers. The cost of landscaping varies depending on the scope of the project. Tasks like installing a new deck or patio can cost a few thousand dollars.
Conclusion
As you can see, there are a lot of closing costs and closing fees to consider when you’re saving to buy a home. While it may seem stressful at first, if you take the time to budget and save for these expenses, you’ll be ready when it comes time to buy your dream home. If you are worried about the overall complexity and cost of purchasing a home, consider using tools that can help you manage or simplify the process.
Paymints.io is a virtual payment platform that makes it easy to transfer funds during a real estate transaction. The platform allows buyers to avoid bank visits and paper checks, and sellers can receive payments faster. For fast markets where time is of the essence, this can be a game-changer that allows you to beat out other offers. When you work with a title companies that uses paymints.io, you can focus on what’s important – finding your perfect home. Schedule a demo today to learn more.
