A Brief Rundown Of Fees And Expenses You Will Face When Buying A Home

During this recession, as we all know, the housing market has taken a tremendous beating. So that means that potential buyers are constantly bombarded with reminders of, "Now is the best time to buy!" and "Rates are at an all-time low!" Because the market is begging for buyers, the impression is often given that hopeful individuals can get into a home for "practically nothing."

This impression, however, is a deceptive one. When you are buying a home, there are myriad costs to take into consideration. If you fail to factor in and prepare for them, you could be out of luck when it comes time to write up an offer on your dream home. So here are a few expenses you will want to be aware of so you can adequately plan for them instead of feeling blindsided by unexpected fees.

One thing to bear in mind when considering loan rates is that the lowest are found from private lenders such as regional credit unions. However, most, if not all, require a full twenty percent down in order to obtain approval, and if the truth be told, the difference is only one or two-tenths of a percent.

When you are going through the pre-approval process, you may be completely shocked by the Good Faith Estimate. Let's go through a few costs that will likely come up on that estimate so you will feel more prepared.

First of all, there is the loan origination fee, which is calculated as one percent of the total loan amount. After that come the processing, underwriting, and document preparation fees. These can add up to a thousand dollars or more.

If you are planning on purchasing a condominium or live in another type of community that owes dues to a home owners' association, you will also have to find out the cost of the HOA transfer fee.

If you will be paying HOA dues, be sure to factor them in with your mortgage payment. Find out which utilities will be included and about how much you would be paying for the ones left over.

Be honest with yourself about how much you can really afford to spend each month. One of the appealing lines that potential buyers hear is that it is more cost effective to buy than to rent, but when you consider the mortgage payment plus utilities that most apartments cover--not to mention property taxes--buying may still be out of your budget.

One thing you will certainly want to consider when getting into your new home is to invest in a home warranty. This will protect you from unexpected expenses like the malfunction or complete breakdown of major appliances.

Since so much of your money will be drained from fees, closing costs, and the down payment, a warranty will be a huge relief if something goes wrong. What's more, having a home warranty also makes your home much easier to sell, even when the market is down.

This is just a short description of the fees and expenses associated with getting into your new home, so you should be sure to investigate thoroughly before you make an offer on a certain property. Don't be afraid to ask lots of questions. Being thoroughly prepared will ensure that you don't become one of the many suffering from foreclosure because they got in too deep.