Upfront Costs When Buying A Home
There are numerous costs buyers must pay upfront when purchasing a home. These include appraisals, inspections, earnest money, lenders fees ,title company fees, and attorney fees. Buyers need to plan for these costs. Borrowers sometimes confuse no money down loans with a loan being no cost. The no money down only means the buyer does not have to pay a portion of the purchase price but is still responsible for other costs to purchase the home.
How much will you owe as your share of the property taxes? Property taxes are usually required to be paid in full when the loan closes. Property taxes are pro-rated, so you only pay your share of the annual bill. The difficulty in determine how much you will owe lies in the fact that every county has different due dates for the taxes. Be sure to ask you mortgage broker or title attorney how much you will owe as your share of property taxes.
As a borrower you can ask for a seller concession to cover your closing costs and pre-paid items so that you have to come up with little to no money for closing costs and such when buying a new home. A seller concession is worked into the purchase agreement to buy a home and the seller actually ends up paying for a certain amount or all of your closing costs. A seller concession is usually either a flat fee or it can be listed as a percentage of the loan amount. An example of a seller concession would be if you were trying to buy a home for 150k and you requested a 3% seller concession in your purchase agreement, the seller would pay $4500 towards your closing costs and/or pre-paid items. Pre-paid items generally consist of pre-paid interest and escrows. Consult your loan professional to find out more information regarding your closing costs and possibly obtaining a seller concession.
Your broker will be able to let you know which, if any, of the closing costs you will be responsible for paying out of your own pocket. Many lenders require that your appraisal be paid for upon completion, or that you pay for your first years homeowners insurance prior to closing. If you may have difficulty paying for any of these charges be sure to let you loan officer know right away.