If you're about to buy a house, you're about to face a multitude of fees. It's valuable to take some time to learn what you'll be paying for. Take a deep breath and read on.
- Points or origination fees: Each point is one percent of the mortgage value, and the more points you pay, the lower your mortgage's interest rate should be. Sometimes you can get your seller to pay the points for you -- if you're the buyer, get your own broker to look into that possibility for you.
- Escrow fees: Depending on your lender and the terms of your purchase contract with the seller, you may have to pay money into escrow either before closing or while you're paying down your mortgage. There are fees for this service, though.
- Homeowner's insurance: Most lenders require insurance before you can take possession of your new home.
- Legal fees: Not everyone needs the services of a lawyer, but if your transaction is too complicated for boilerplate forms, you'll want an attorney looking out for you.
- Private mortgage insurance: This may be required if your down payment is less than 20% of your home's value. You may need to pay as much as a full year's worth of premiums at closing.
- Document preparation fees: These fees go to your lender, broker, or attorney.
Title insurance: This insurance, offered by companies like First American
(NYSE:FAF)and Stewart Information Services (NYSE:STC), covers you (and your mortgage lender) if it turns out the seller didn't really own the property you bought.
- Appraisal fees: You generally have to pay to obtain the fair market value of your home -- important for tax purposes and for the mortgage company to approve your loan.
- Credit report fees: Your lender will want a verified credit report.
- Tax service fees: These are to make sure that your real estate taxes get paid.
- Survey fee: A survey will determine the exact boundaries of your property. (If an existing survey can be used, then you won't need to pay this fee.)
- Property taxes: You may owe some property taxes immediately, if the seller has paid them covering a time period when you'll own the home.
- Pest inspection fee: New homes don't normally require this, but older homes do.
- State recording fees: These depend on state requirements.
- Notary public charge: You'll need a notary to verify your identity.
Sadly, even this isn't an exhaustive list.
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