Up-Front Costs: Prepare to Pay These Before You Move In


· Down payment. A down payment is the amount you contribute toward a home’s purchase price. Although it’s not required for all mortgages, depending on the lender or loan type, it can range from 0% to 20% of a home’s sale price.

· Home inspection. Even if your lender doesn’t require it, a home inspection is a smart investment. It can detect existing problems with the home and, depending on the results, might give you an opportunity to renegotiate the price, ask for repairs or even back out of the offer.

· Closing costs. Before you can finalize the sale, you’ll be responsible for several fees. Your lender should provide you with an estimate of how much you can expect to pay in closing costs, but they typically range between 2% and 5% of the loan.

· Appraisal fee. Required by lenders, an appraiser provides you and your lender an independent, estimated value of the property. It will ensure you’re not paying more than what the house is worth. The average cost is $300 to $500.

· Taxes. Depending on when you close and when property taxes are due, you could owe several months’ worth of property taxes at closing. They’re calculated based on your home’s value.

· Homeowners insurance. Most people expect to pay homeowners insurance, but many don’t realize they may have to prepay an entire year at closing.

· Private mortgage insurance. If your lender requires private mortgage insurance (PMI), you may have to pay the first premium at closing. (Usually if your down payment is less than 20%)

· Settlement Attorney fees. Some states require you to have an attorney manage closing to make sure all the documentation is set up correctly, so you’re protected.

· Processing fees. These fees cover the lender’s costs to prepare the loan. They could include loan origination or credit report fees and the cost of the application.

· Other costs. Additional costs could include survey fees (to determine the property boundaries), title insurance and recording charges (the cost for state and local governments to record your deed, mortgage and loan documents).

· Moving costs. Whether you rent a truck to move yourself or hire a moving service, don’t forget to add those costs to your budget.

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