Money / Financial Planning
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Buying a home is likely the most expensive purchase you and your family will make in a lifetime, with a few exceptions. Not only will you be forking out a sizeable amount of money for the down payment and a mortgage, there are a variety of other, often hidden or forgotten costs that pop up during the homebuying process.
According to Amy Kite, real estate agent and owner at The Kite Team at Keller Williams Realty Infinity, “I have worked on the selling of hundreds of homes, and I can’t remember one instance where the purchase of a home didn’t cost more than expected. There are always unexpected costs; things are more expensive than you might think, and extra fees really add up.”
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Don’t be caught by surprise; know about these 10 costs before they arise:
Before you can even sign on the dotted line to buy a house, it first has to be inspected. And contrary to many first-time homebuyers’ expectations, that cost is not paid by the lender, said Shelbi Souther, a real estate agent with McWilliams Team Realty in Denver.
“Inspection is actually a cost that is usually covered by the buyer. The cost of inspection can vary based on geographical location and service provider, but it is one of the first and most important costs after you are under contract with a home, to ensure there is no major structural issues or safety concerns.”
Agent Transaction Fee
Another cost that can surprise homebuyers, Souther said, is an agent transaction fee paid separately from the agent commission.
“While agent commission is commonly paid by the seller’s proceeds and divided between the selling agent and the buying agent, an agent transaction fee is an additional cost that the agent or their employing broker may charge for the transaction. It is usually a fixed fee — and can vary based on the agency.”
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If it seems like there’s a fee for every paper you sign during escrow, you’re right. Souther reminds new buyers that you also pay title insurance, at closing.
“Title insurance is important when protecting you and the lender from any financial losses that could occur as a result of a defect in title,” she said. “Title insurance protects you and your lender from having to pay out of pocket for any legal expenses …….