9 Thoughts on What are some of the hidden costs of buying a first home?
  1. Reply
    TMLeaf Fan
    July 7, 2011 at 5:59 am

    Lawyers fees
    mortgage application fee
    land transfer tax
    utility hook up charges
    moving costs
    home inspection charges
    Title search fees

  2. Reply
    July 7, 2011 at 6:58 am

    TMLeaf covered it well, and then you can expect ‘hidden costs’ AFTER you purchase, depending on what you purchase. If the water heater takes a permanent vacation nine months after you buy the house, be prepared to pay. No, the seller won’t be obligated to fix it for you. If it was in proper working order when you bought the property, you bought it. In other words, check carefully the condition of expensive mechanicals and components of the house to determine as well as possible how much life is left in these items.

  3. Reply
    Michael Iarrobino
    July 7, 2011 at 7:56 am

    I would add the following to the previous list:

    appraisal fee
    proration of taxes, condo or home-owner association fees
    reimbursing seller for propane/oil in tank (if applicable)

    then of course there is the down payment on the home

    You also typically pay interest on the loan from closing date to the last day of the month

    there can also be discount points paid at closing to reduce the interest rate of the loan

    — Since it’s recommended that you get pre-approved before looking at homes, the lender should be able to give you an estimate of closing costs.

    When you make an offer on a home you should be prepared to put a “deposit” which is held until closing. Your agent can give you some guidelines for what is typical and recommended for your market.

    What, you don’t have an agent? I think a buyer agent is a good idea, especially for first-time home buyers. A good agent will be able to advise you and direct you through the whole process, help with negotiations, and help make the entire transaction go as smoothly as possible. I can generally save my buyers 2-3 times my fee just in the negotiation of the sales contract.

  4. Reply
    DJ B
    July 7, 2011 at 8:34 am

    There shouldn’t be any “hidden” costs. If you are working with a reputable loan company, and a good Realtor, they will provide you all the information about your transaction.

    Do your homework first. Select 3 Mortgage Companies and learn about their loans programs. Select the program that best suits your financial goals. Next select 3 Realtors who have a CRS or GRI designation. Pick the one you feel really listens to your needs and shows you homes that fit those needs. It helps them if you make a list first of what you “need” and “would like to have” in your first home.

    If I can assist further, just email me.

  5. Reply
    Ed W
    July 7, 2011 at 8:43 am

    Purchasing a new home is less likely to have “hidden costs”.
    All purchases have the standard closing costs. You can get an idea of the potential closing costs by asking your realtor, bank lender, or attorney for a copy of a settlement sheet. Beside closing costs you are more likely for face hidden costs with a older house. Even after a professional house inspection and even with the inspection report buyers sometime accept a condition e.g. 100 amp electrical service and then after purchase must upgrade to 200 amp service. A septic system may test well but your family size may impact the need for an upgrade. House warantees are beneficial and is something sellers often offer to ease the mind of buyers.

  6. Reply
    Nichole O
    July 7, 2011 at 8:48 am

    I am a certified m ortgage planner. You should have no “hidden” fees, You should receive a disclosure package within 3 days of applying to a lender, this includes a Good Faith Estimate of the fees involved in closing your new mortgage. An item that should be on there, but often is not is the yield spread that the loan officer receives from the lender for doing your loan (usually you will see a spot somewhere where it says 0-5% ysp. Loan officers are not required to offer ysp dollars on the Good Faith Estimate, but it is disclosed on the final HUD.
    There are some items on the GFE that can change since the LO may not have exact numbers at the beginning (pre-paid interest, exact cost of the title insurance, property tax pro-ration, any additional lender fees that the lender adds in.) Ones that should not change are the fees that the brokerage charges to do your loan (they have to get paid too.) If you are paying for a credit report, make sure that you get a copy of it after you close. Also make sure that you get a copy of your appraisal after you close. Add these to your house file.

    And finally in response to the person who suggests you contact 3 lenders, let me just tell you that having your credit report pulled multiple times when you are trying to get pre-approved for a mortgage is a very bad idea. Every inquiry drops your score a few points. And not every loan officer pulls only one credit report and then distributes that to the lenders for review. Quite often lenders require their own copy pulled through their own source. The average loan officer seeks a pre-approval from 3-4 lenders, times that by 3 loan officers and you have 9-12 credit pulls potentially, which can translate to a credit score drop of about 50-60 points. If you have a 650 credit score, you may have just prevented yourself from obtaining 100% financing if you need it. OR you are going to pay a much higher interest rate.

    My advice is simple, find a certified mortgage planner, we teach you about credit, collateral and your true capacity on what you can afford. If your credit is marginal, we offer assistance inbuilding it up, we can refer you tocertified Realtors who can be your best friend in buying a home. We are more than just a loan officer, we are a tool and resource you need to get the best deal for your situation.

    I offer this advice to anyone who needs it. You can contact me via email, and I will be happy to help you find a CMP in your area.
    Good Luck

  7. Reply
    July 7, 2011 at 9:25 am

    By law, your “closing costs” are spelled out for you, so they are not hidden. Those closing costs include much of what has been stated above!

    Up front costs… Loan application fee, appraisal fee, any inspections that you request are typically the buyer’s responsibility (per contract).

    It’s a Big Step… buying your first home! But the benefits outweigh the negatives. Enlist the aide of a REALTOR – they’ll walk you thru the process of buying your first home. And, they’ll cost you Nothing!

    Good luck in your purchase!!

  8. Reply
    July 7, 2011 at 9:54 am

    The most important item here is that you need to make sure you are using a Mortgage Professional that you trust! If you have questions, they should be able to answer them with no problem. Always ask what costs are included and your Loan Officer needs to send you a Good Faith Estimate within 3 days of starting your application, this way there will be no surprises when you finally go to the closing table.

  9. Reply
    July 7, 2011 at 10:06 am

    Some people mentioned things like a water heater that quits and things that should be spelled out in your paper work, but there are the many small things (and some not so small) that add up quickly

    I think that things like the following are hidden costs:
    a lawnmower
    a snow shovel
    a garden hose
    some new flowers for the bed by the door
    furniture to fill the rooms
    paint for the room that has a color you can’t stand
    some curtains
    a new shower head, because the water pressure just isn’t right
    some tools
    a plunger

    I think you get the idea.

    Good luck

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