When you are buying a house, the hidden costs involved can be significant. However, there is still hope. For beginners who plan on house shopping, these costs can be minimized by taking the following steps!
You will want to read up on our tips before you begin shopping for your dream home. These will help you save money and get the best deal possible when you eventually apply for a home loan!
Mortgage and home loans
One of the best ways to get a home loan is to use a mortgage broker to help you secure a mortgage.
Brokers earn a commission on each mortgage that they sell, so it is in their best interest to get you to sign on the dotted line as quickly as possible.
You may also opt to seek out assistance from a mortgage broker before you are in the process of house shopping. Sometimes emergencies crop up that cause you to have difficulties in making your monthly mortgage payments.
A mortgage broker worth their salt should be able to negotiate with your current lender for a lower rate of interest. In some cases, they can also reduce the cost of the mortgage by prepaying the entire amount for a specified period of time.
In addition, a mortgage broker can help you avoid paying additional late fees. For example, if you are unable to meet your payments to your credit card company, your mortgage broker may be able to help you negotiate a payment plan with your card company.
Before applying for a mortgage, check out our essential tips on getting the best mortgages!
The hidden cost of settlement fees
Another hidden cost pertains to the settlement fees.
Settlement costs can easily run from 5% up to 10% percent of the overall cost of the house. In some cases lenders waive these charges, but they rarely do.
In order to avoid incurring these costs, you should plan on budgeting a portion of your payments into the purchase price of the house. This will give you some added security and it will also make the purchase go much smoother.
If you can budget this money, then you will most likely find the financing easier to obtain.
Appraisal fees and the best way to avoid them
Furthermore, there is also the additional charge for the appraisal that will be done on the property you are interested in.
When you talk to different lenders about getting a mortgage, they may ask you what you think the property is worth. If you get several appraisals, then you will know that the lender’s estimate is probably far below the true value.
To avoid this, simply ask your mortgage broker for an appraisal so you can ensure that you are getting a fair price.
In today’s economy, the best way to get a home loan is to work with a mortgage broker. Your mortgage broker will work and try to get the best rates available for your situation.
They can shop around on your behalf and also find you the best lenders in your area to try and negotiate with them for better deals.
Working with a mortgage broker might seem like more work, but it will save you thousands of dollars in the long run.
Just so you know, here’s an article by the HousingWire in what to expect regarding home inspection and appraisal.
The fine print in buying a house
One more hidden and expensive cost can sometimes be buried in the fine print of a contract that you sign.
There are many hidden clauses, like fees and interest rates that can instantly turn the deal from great to awful. These can cause the price of your dream home to go up, even after you have found the best loan for the lowest rate.
Check out this guide by Openagent in understanding the contract of sale when purchasing a property.
The easiest way to avoid any of them is to work with a real estate agent who specializes in helping people buy their dream home. If you have never sold a house before or have any experience in this field, you should highly consider consulting with a real estate agent.
By then, they should have already found you the best loan for your situation and gotten you the best price possible. Working with a good real estate agent will eliminate most hidden costs and give you your affordable dream home!
About to buy your new house? Here’s a handy checklist for home buying made by the REA Group so you don’t forget all the necessary steps.