When purchasing a home, anticipate multiple expenses throughout the entire process, for example, your down payment is just one homebuying expense. You’ll face a number of one-time fees, as well as new monthly and annual costs. Sellers typically incur far less cost during the sale of their home because they are leaving. Deriving a realistic budget will help you determine what you can afford.
Before buying the home, during the mortgage application process, when you “close” on the house, and once you have finally moved into your new home will all have fees associated. These expenses will vary based on the area of the country and the size and type of home. Some are one-time fees and others are monthly expenses. The table above describes some of the fees and expenses you will incur.
Most of these fees are due on closing day, when you officially get the new title for your house. These fees include lender fees for origination and processing of the loan, Escrow fees, Title fees to cover the title search and insurance, Underwriting fees, and Third Party Fees to cover the settlement agent, etc.
Your lender is required by law to provide you with a Good Faith Estimate (GFE) of the total amount for these costs at least 3 days in advance, with a final cost of the fees the day before. Lenders will typically consult with clients at the beginning of the relationship to give them a preliminary idea of what closing costs to expect as well, so these costs shouldn’t come as a surprise to you. We typically recommend that our buyers save 20% of the total purchase price for the down payment, and an additional 3% of the total purchase price for these closing costs.
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