You might be aware of most of the expenses related to the process of home buying. Yet there could be quite a few expenses which you might not be aware of and need to plan to avoid last minute slippages. It would be prudent on your part to plan all the expenses relate to home buying. This financial discipline would not only help you save but also help you close the sale in a smooth and hassle free buyer. First time home buyers need to be extra diligent and careful detailing these expenses.
Home Mortgage Costs
When you avail a home loan from a lending institute, it is obvious that you need to organize your contribution towards home purchase in the form of a down payment as well as the recurring mortgage payments towards servicing of your home loan. More importantly, there are several expenses payable to the lending institute towards administration and processing of your home loan. It is worth the exercise to compare the various fee charged by the institutes before you decide on your home loan agency.
o Credit Report Fee - Depending upon the lending instate, they may or may charge fee related to your credit appraisal.
o Processing and Originating fee - These charges are also not levied by a few lenders.
o Underwriting fee- Make sure you minimize the fee charged towards the review of your credit worthiness to determine if you are eligible for the loan
o Home Inspection Cost - it is advisable to incur these expenses because it is worth it and helps you arrive at the fair value of your purchase.
Legal Fees
Check out the legal fee payable based on the nature of property transaction that you have entered into and the state in which you have purchased the property. These legal expenses could be as high as 1.5-2% of the property value.
State Taxes
Different states levy transfer registration fee at varying rates. There would be certain other taxes as well depending upon the state like the sales tax and the stamp duty charges. First time home buyers would be getting certain tax concessions you must check out the property laws applicable to your state.
Relocation costs
Plan for the costs related to your physical movement into your new home. The expenses would off course depend on the distance involved. In case you are planning for professional re-locators, ask for a couple of quotes before deciding. There are many utilities for which you need to pay an upfront security deposit. You may end up incurring cost on a few repairs as well as some home improvement initiatives as you step into your new house.
Even though you might have taken majority of the home buyer's expenses in your estimation exercise, it is highly probable that there could be still a couple of unplanned expenses likely to arise and a contingency fund would always help. Experts suggest an amount of app. 2% of the property value to be reserved towards contingencies related to home buying.
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