Closing Costs And Other Fees Associated With Purchasing A Home
We all agree purchasing a home will be for most of us the largest purchase you will make in our life. You have found your future home arranged for financing and are now waiting for the closing date. But to many peoples surprise there are other monies that will need to be disbursed before or on the closing date.
Some of the upfront costs you should plan on paying when purchasing a home include appraisals inspections earnest money lenders fees title company fees and attorney fees. It is vital that you plan for these fees speak to your real estate professional or your lender who will be able to outline and estimate all of these costs for you. The total cost of these various expenses and fees can run into the thousands and even the tens of thousands of dollars. It pays to be prepared.
You must also be careful of the 100 mortgages or nomoney down loans. A nomoney down loan does not mean that there arent any costs associated with the loan. In reality these types of loans allow the buyer to borrow 100 of the purchase price of the home however the buyer is still responsible for the numerous other costs mentioned above.
You should also keep in mind that you will have to pay a portion if not all of that years property taxes. Typically property taxes are called on and required to be paid in full as the home closes. A buyer upon closing the home will be called to pay his/her share of the annual bill as it is prorated. You may want to enquire about the property taxes of a specific house or neighborhood before signing the purchasing contract. Some neighborhoods are taxed more heavily than others.
There is however a way of avoiding having to pay some or all of closing costs. As a borrower you do have the right to ask a seller concession to cover your closing costs and prepaid items. This makes it so you do not have to come up with any money at all for closing costs.
A seller concession is worked into the purchase agreement and the seller will end up paying for some or all of the closing costs. The seller concession is either a flat fee or a percentage of the loan amount. This is a fairly common practice particularly in depressed real estate markets.
As for prepaid items they generally consist of prepaid interest and escrows. Many people run into difficulty reading and understanding the multiple costs that are involved with purchasing a home. Because of this do not take any chances and talk to a loan consultant or mortgage broker. This will help clarify your financial obligations.
Purchasing a home is an exciting adventure. Dont let your fear of the unknown spoil this joyous event. Being prepared and well informed will avoid you being shellshocked when the time comes to paying the bills. The more informed you are the better prepared you will be for the many upfront costs associated with buying a home.
About the writer: Mira Novosel is a Re/Max real estate agent in Mississauga Ontario. Contact Mira and her team of professionals to search for homes for sale in Mississauga and for real estate market news and information.
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