Purchasing a home can be a costly experience in more ways than you may expect it to be. Between down payments, long-term interest fees, and sneaky hidden fees, the costs associated with purchasing a home can quickly add up. Some fees connected to your home purchase are unavoidable, while others you may be able to have waived if you know the right questions to ask.
At Homes For Heroes, we have made it our mission to help you, our Heroes, navigate the waters of home buying and save you money along the way. On average, when our heroes work with one of our real estate specialists, they save $2,400 on their home purchase. Partnering with us means no red tape, no hidden fees, no upfront costs and no catch.
We are committed to making your home buying experience as smooth and painless as possible for you. We are happy to share a few tips we have learned along the way that can help save you thousands of dollars on your home purchase.
Closing costs are fees associated with the purchase of your home that, unlike a down payment, you will never see again. A down payment goes directly to the purchase of your home and can help you build equity. On the other hand, closing costs are fees paid to third parties and your lender. Those fees can quickly add up to 2 to 5% of your homes purchase price.
Now, in any home purchase, you can always request that the seller pays your closing costs. However, if the seller refuses, there are many fees you should be prepared to pay. These fees include:
- Appraisal fees – the cost of having your home’s value assessed by a professional
- Survey fees – the cost of having the property lines confirmed
- Application fees – the cost of processing your application
- Attorney fee – the cost of having an attorney review all of your closing documents
The above is just an example of some of the fees tied to your closing costs. Depending on the state your home is purchased in, this list can grow exponentially.
No closing-cost mortgages are a great option for home buyers who will only reside in their home for five years or less. With no closing-costs mortgages, lenders waive the closing costs and, instead, the buyer agrees to a higher interest rate. Long-term mortgage payments are higher, but you save on upfront closing costs.
Private Mortgage Insurance
While the amount of your down payment may seem arbitrary to some lenders, the truth is paying a smaller down payment can be a great help up front, but in turn, you could be required to pay for private mortgage insurance.
Private mortgage insurance protects your lender in the case of default. When you make a smaller down payment, your monthly mortgage payments are higher. That increases the risk in the lender’s mind of you defaulting on your loan.
In some cases, if you provide less than 20% down, you may end up paying more long-term in PMI fees that can either be attached to your loan or paid up front. Be sure to ask your lender about whether or not you will be required to pay for PMI before deciding your down payment amount.
HOA, Co-op, Condo assessment
If you want to purchase either a condo or co-op, be sure to ask about any assessment fees. These are fees that are separate from your mortgage payment, so if you are not aware of them before purchasing your home, they can quickly add up.
These assessment fees are used to pay for services such as landscaping, painting, and any improvements that are necessary for the entire complex. Knowing these costs upfront can help you budget accordingly and not end up with sticker shock when your bill for these fees shows up at your door.
HOA or Homeowners Association fees can cost the homeowner anywhere from $200 to $400 a month. These fees pay for amenities that your development has such as pools, a pool house, security gate, sidewalks and tennis courts. If a need comes up and drains the HOA account, homeowners will be asked to pay the difference on top of their monthly fee.
Utilities are something we all plan within our monthly budget. Did you know, though, that depending on the company you establish your utilities with, you could be asked to pay a down payment that can reach upwards of $200?
We advise you to call the utility companies that will be servicing your house and inquire about down payments and average monthly bills for consumers in your area. Go ahead and begin to set the money aside as soon as you start the home buying process. That way, when it comes time to close on the home and begin the process of moving, you can focus on getting your family into your new home rather than unexpected utility fees.
Utilities are a necessary cost for all homes. Planning for your utility costs ahead of time will give you a good idea of what your budget will look like once you’ve purchased and moved into your home. If you are buying a larger home than what you are used to, plan for your utility costs to increase as well.
When calling the local utility companies, ask if they waive fees for active duty military, first responders, and teachers. Many utility companies will either waive the fees altogether or offer you a discounted rate for your service.
At Homes for Heroes, we are excited to walk alongside you through the home buying process. We understand purchasing a house can be a stressful time for you and your family, and we are committed to seeing you through it.
We can’t thank you enough for your sacrifice to your country and your communities. What we can do is offer our support and guidance as you purchase your home. We hope that in some small way, we can serve you because you have served so many.