What Are the Costs Associated with Buying a Home?
Buying a home can be one of the most significant purchases you make in your lifetime. Knowing the costs, you can expect when deciding to plunge into homeownership is essential. While the cost can vary significantly from one transaction to the next, some fees and expenses are standard across most home purchases. This article will help you understand the costs you can expect when investing in a home.
Lending Fees
Lending fees include the down payment for the loan, loan origination fees, processing fees, and appraisal fees. Depending on your loan type, you may also be required to pay mortgage insurance. This additional fee, which gives the lender some protection against default, is added onto your mortgage payment. You will be required to pay for title insurance for the lender which protects them against any claims that might be made against the title to the property.
Legal Fees
You'll need to pay for a title opinion to verify that the title to the property is free and clear of all encumbrances and restrictions other than those of record. You'll also need to pay a fee to the title attorney to facilitate the paperwork at closing. It is optional to purchase an owner's title insurance policy, which provides you with some protection should somebody make a claim against the property during your ownership and even should you sell in the future.
Home Acquisition Costs
Home acquisition costs also need to be considered. This includes the earnest money deposit (A deposit made at the time of an offer showing the seller your sincere interest in the property), various inspections (Which are done by people chosen and paid for by the Buyer) moving expenses, and your share of the transfer tax to the State of Maine which is $2.20 per thousand. If the Seller has paid property taxes in advance, you will be required to reimburse them those funds. Unless negotiated otherwise, you may be responsible for reimbursing the Seller for any fuel remaining in their tanks at the time of closing.
Brokerage Fees
The Buyer’s Agreement that you sign when you choose to have an agency advocate on your behalf describes the compensation that you agree to pay, or cause to be paid, to the agency. At the closing, you will deliver the necessary funds to complete the transaction. The brokerage fee, also known as the commission, is then deducted from the Seller’s proceeds and distributed to the agencies involved in the transaction according to their company policies. In some cases, the amount of payment offered by the Seller’s agency does not meet the requirements of the agency that represents your interest in the transaction. In such a case, you may be asked to make up any difference between what your agency receives for reimbursement and what you agreed to pay, or cause to be paid in your Buyer’s Agreement. Your agent will be able to further explain your rights and obligations with respect to payment for their services. Transparency is key.
Other Expenses
It's important to note that there may be other miscellaneous expenses that you need to consider. These expenses include purchasing appliances, curtains, furniture, and homeowner’s insurance.
Buying a home is a major investment that requires careful consideration of the costs involved. Speaking with a real estate professional regarding your purchase is always a good idea. They can advise you on what fees you can expect to pay and how much they may cost while navigating the home-buying process.
