Plan ahead for Hidden (Closing) Costs

With your focus on building your down payment fund and figuring out what your mortgage payment will be, it’s easy to overlook some of the smaller fees that come along with a home purchase.  In addition to your down payment, some of the other costs involved in buying a home include:

  1. Appraisal Fee - This is paid to the appraisal company to confirm the fair market value of the home.
  2. Escrow Fee - Paid to the escrow company to conduct the closing
  3. Recording Fee - A fee charged by your local recording office, usually city or county, for the recording of public land records.
  4. Application/Processing Fee - A fee charged for processing a loan application
  5. Underwriting Fee - Covers the cost of researching whether or not to approve your loan
  6. Title Insurance Fee - This is an insurance policy protecting you in the event someone challenges your ownership of the home.
  7. Transfer Tax - This is the tax paid when the title passes from seller to buyer.
  8. PMI - When you put down less than 20% on your new home, your lender requires that you purchase private mortgage insurance which is a policy that protects the lender from losing money if you end up in foreclosure.

These fees range, but on average, they can add up to roughly 2.5% of the sale price.

8 Steps to Buying a Home

FHA vs. Conventional Loans