We all know that buying a home is expensive. However, the down payment isn’t the only cost that you need to budget for. Here are a few of the hidden costs that can come with buying a home and how you can reduce them.
When taking out a mortgage, a lender may ask for an appraisal – this involves sending someone around to assess the value of the property. An appraisal offers proof that the property is the value that you say it is and could be essential for getting approved.
Appraisals tend to cost an average of $500, although it depends very much on the type of property and its location. Costs can vary slightly from lender to lender as this guide to appraisal costs shows. Always ask a lender about this cost if you are unsure.
An inspection is commonly confused with an appraisal, but they are two very different things. An inspection is recommended to give you an idea of the condition of a property and any future repair costs that may be around the corner. Unlike an appraisal, it benefits you and not the lender.
The average home inspection is about $315. Bigger homes will generally cost more to inspect because there’s more to look at, while apartments may be fairly cheap. Consider whether you need to test for all the extras – the likes of mold testing and radon testing could cost extra.
Buying a home involves a lot of paperwork. Unless you have a good knowledge of property law, it’s likely that this paperwork will be too complicated to handle yourself. For this reason, most buyers hire a solicitor (also known as a conveyancer).
Solicitor fees can range from $500 to $2200. You can usually save money on this cost by shopping around and negotiating. More established and reputable solicitors may charge more.
Generally speaking, the buyer shouldn’t have to pay any agency fees. However, you do need to be careful as there are a growing number of sneaky brokers out there that are charging hidden fees.
Always ask about fees upfront when choosing a broker. A good broker won’t try to rip you off – in fact, some brokers may even reward buyers with a home buyer rebate. Doing your research into local brokers online is recommended.
Money transfer fees
A small fee is usually charged when transferring the mortgage money to the solicitor. This is unlikely to be a lot of money – usually no more than $50 – but it’s still a cost to consider.
You may come across other fees such as escrow fees, but these generally only affect sellers (i.e. if you’re a first-time buyer, don’t worry about this cost).