Reaching the point in your life where you feel ready to buy a home can bring excitement and uneasiness. The home buying process takes time and requires careful planning to optimize the funds you have available.
Part of the financial obligation you have is to pay closing costs. A variety of expenditures fall under the closing cost umbrella.
Inspection and appraisal
One of the first things you may want to do after signing a contract is to have the home inspected. A thorough inspection will reveal faulty grading, structural concerns, downspouts and environmental hazards among other things. A home with severe defects may not only compromise your safety but require costly repairs. Your cost for an inspector to come to assess the property is often rolled into your closing costs.
Another common closing cost is the appraisal fee. Having an appraisal will help you identify the fair value of the property you want to buy. Any discrepancies in the price can give you an opportunity to negotiate a better sale price with the seller.
Property taxes and fees
Part of owning a home is a requirement to pay property taxes each year. Acquiring the title to a new home means you assume responsibility for these legal taxes and fees. Your closing costs may reflect this new financial obligation. According to Zillow, other taxes and fees may include the following:
- Mortgage insurance
- Transfer taxes
- Title insurance
- HOA transfer fee
You can ask for a breakdown of the fees included within your closing costs. Depending on the circumstances, you may have the opportunity to negotiate the final price of what you pay.