Buying a home comes with many costs and fees. Even with getting a mortgage you will still have a down payment among other costs you need to be prepared for. You need to factor in closing costs, the cost of commissions, and property taxes.
Closing Costs
Closing costs are part of the purchase of your home. Many people are surprised by the closing costs, so you should ensure that you know what these will be when obtaining your mortgage. Closing costs cover other costs such as preparation fees and attorney’s fees. Sometimes you can negotiate with the seller to pay the fees. When buying your home you should be ready to pay 3-4% of your home’s value for closing costs.
The Cost of Commissions
Real estate agent’s get paid by commissions on the sale of the home. Typically, the commission is split between the agent who represents the buyer and the agent who represents the seller. This can be 5-6% of the price of the home. The fees are often accounted for in the price of the home, which then the seller will typically pay these fees through the buyers’ money. This may seem like an extra cost that is unnecessary by using an agent. However, this is a cost that can be very helpful for you. You should choose an agent who is skilled at their job because they can have many benefits. An agent has the negotiation skills to get the best deal for you. The agent spends time coordinating inspections, appraisals, and handling the paperwork to close on the home.
Property Taxes
Property taxes can be rolled into your mortgage. They vary from area to area and can be small or significant. Before purchasing a home, you should research property taxes for the area so you know how much you will be paying each year. Within your first year of ownership, you could be hit with a supplemental property tax. This means that the house was appraised for a new value and was undervalued at the time of sale. You would be responsible for the difference in taxes so it is something you should be aware of.
Buying a house isn’t as simple as the price on the listing. There are many costs associated with the purchase. Being aware of costs like closing costs, commissions, and property taxes can help you know exactly how much you can afford.
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