Upfront Cost When Buying A Home

Dated: 10/24/2019

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When buying a home, most people focus on price and interest rate. While these are important, buyers rarely focus on the fees associated with getting the keys to their dream home.

Not all fees are paid at the closing table. Some are out-of-pocket costs that must be paid as part of your closing. This list outlines the 10 most common fees when buying a home. 

Home Inspection Cost

Once you have submitted an offer on a home and the seller accepts, the first thing you and your realtor will need to do is schedule a home inspection, which typically costs about $450 and must be paid at the completion of the inspection. 

Homeowner’s Insurance

Homeowner's insurance is required when borrowing money to purchase a home. The policy combines personal and liability insurance, as well as hazard insurance to cover any damage to the dwelling and its contents. This is especially important if you live in areas where hurricanes, flooding, or other natural disasters occur. Adequate coverage is needed in case of significant damage due to the hurricanes. You'll have to pay the first year's premium to show that you have insurance in place before you close. After that, you can escrow the annual premiums into your mortgage payment. 

Title Insurance

Title insurance is highly recommended because it defends against any litigation that challenges the validity and legality of the new property owner. In other words, it protects you against any title issue that may affect your ability to keep your home. You're usually required to buy lender's title insurance, which is rolled into your closing costs or financed into the loan. 

Appraisal Fees

Your lender will order an appraisal to ensure the house is worth the amount you want to borrow. The appraisal process determines the price paid for the property, and is primarily based on comparable sales of other homes in the area. This information will provide the fair market value of the home. This fee is included in the closing cost paid at the closing table.

Point or Origination Fees

The bank charges buyers an origination fee to create the loan. A point is one percent of the loan and is often worked into the total cost of the loan. This amount is also paid at the closing table.

Credit Report Fees

Lenders will need to obtain your credit report to secure your loan. A verified report typically costs about $25, which may be included in your closing costs. Some lenders will waive this cost for you.

Survey Fee

The attorney who handles the closing of your property will purchase a survey that shows the details of the property, including the exact legal boundaries. If an existing land survey cannot be obtained, a new survey will have to be conducted. 

Property Taxes

Depending on the time of year you are purchasing your home, you will need to refund the seller for taxes already paid for the period where you will be the owner. Also, there may be other municipal taxes or fees for sewer or water. These fees are usually escrowed at closing. 

State Recording Fees

The State of Florida has recording fee taxes, which can vary between a few hundred dollars and a few thousand dollars. These fees are a part of your closing costs and are paid at the closing table.

Document Preparation Fees

The closing attorney will have a fee to cover the preparation of the required loan and closing documents, and to facilitate the closing activity for your home. This fee is rolled into the closing costs. Depending on the state and market climate, the seller or lender may cover some of these fees.

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Karen M. Mitchell

When working with clients, Karen makes it a priority to get to know them and connect with them to fully understand what their dreams are when it comes to finding a home. Her warmth and loyalty with he....

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