BE PREPARED - EXTRA COSTS TO CONSIDER WHEN YOU ARE BUYING A HOME!
When you buy a home, there are expenses (on top of the purchase price) that you need to be aware of. Some are one-time charges, others are monthly or annual fees. The bulk of the closing costs are normally lender costs. Ask your Realtor to prepare you an estimate before you write an offer. Here is a list of some of these costs:
Property Taxes - paid in arrears and prorated at closing. Your lender will normally collect an initial amount plus 1/12 of the annual tax estimate monthly to place in an escrow account, and will pay the taxes for you at the end of the year. Don't forget to request the Primary Residence and Homestead Exemptions to minimize your tax.
Hazard (Homeowner's) Insurance - your lender will require all peril coverage (plus flood coverage if the home is in a federally designated flood area). As with the property tax, this expense will be collected monthly into escrow, and the bank will pay for the insurance renewal when it becomes due. Insurance is paid for in advance so the closing attorney will collect the first year's premium, plus some prepaid amount as a buffer for the escrow account. It pays to shop around. Contact us for names of reputable insurance agents.
Title Insurance: A one-time fee paid at closing. Lender's title insurance is mandatory, buyer's title insurance is optional, but highly recommended. It protects your equity in the eventuality of a title defect in the future, for as long as you own the home.
Appraisal - your lender will normally order and collect from you a $350-$400 fee to order the appraisal at the time of loan application.
Closing Attorney's Fees: normally between $350 and $450 per transaction, plus deed/mortgage registration and courier fees, paid at closing.
Survey - if there is no recent survey, it may be necessary to order a new one before closing, which may cost from $450 to $700. If flood insurance is required, it is best to order an Elevation Certificate that the insurance company will probably request to quote your flood insurance!
Mortgage Insurance - lenders insure themselves against your default by using private mortgage insurance (PMI) that the borrower pays for (not required only if financing less than 80% of the value of the home). PMI is normally paid monthly. FHA loans require their mortgage insurance premium (MIP) to be partially prepaid at closing.
HOA Transfer Fee: Some neighborhoods will charge at closing a percentage of the sales price as a one-time fee to build up their working capital.
HOA Fees: The Homeowner's Association may charge an annual HOA fee (and/or a montly regime fee in case of a condominium ownership). These fees are normally paid for in advance at the beginning of the year, and will be prorated between Buyer and Seller at closing.
Your lender should give you a pretty accurate estimate of the funds required to close via a Good Faith Estimate (GFE) with sufficient time to digest it. The last thing you need is for unbudgeted financial obligations to crop up hours before you take posession of your new home!
Contact us for a FREE BUYER CONSULTATION! or give us a call, (843) 900 0155. We want to help!!
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