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10 Financial Factors to Consider When Buying a Home

Applications and Closing Costs
Buying a home will cost you for things like mortgage applications and closing costs.
Buying a home will cost you for things like mortgage applications and closing costs.

As with anything you buy and sell, there are costs for doing business when you buy a home. Some of the services and filings you can expect to pay for include the following:

  • Mortgage application fee: Lenders will charge you a fee for mortgage application. The price will vary, but can cost several hundred dollars.
  • Home inspection: Separate from the home appraisal, which establishes the value of the property, an inspection finds any problems with the house before purchase, protecting buyers from underlying issues and giving the owner time to correct problems tied to making a sale. Expect to pay several hundred dollars or more.
  • Closing costs (deeds/titles/land transfers/legal fees): Processing the papers for a home sale involves agencies at the private and government level, so check with a financial and/or real estate expert to get a list of how much each patch of dirt and piece of paper will cost. Make sure each step of the way that you know what you'll be signing and paying for when the property gets signed over. And the closing itself will run about 2 to 3 percent of the cost of the house [source: FICA]. Lenders provide truth in lending disclosure statements to detail percentages and financing fees before closing, and reviewing these carefully and asking questions can prevent charges from sneaking up on you [source: FDIC].
  • Unexpected charges and fees: This is a gray area, and asking people you know about payments they made but didn't expect is helpful. Unfortunately these "etcetera" costs can come during the final negotiations or closing, and they might just have to be paid in order to move forward.

As with other costs, expect to hear "there may be a small filing fee" or "we might encounter a separate charge for." Staying on top of the vague charges and itemizing them as closely as possible will keep the surprises to a minimum.