If you think a mortgage is going to absorb all the cost of buying a new Durham home, you’ve got another think coming. Between making a down payment and covering various closing costs, most Durham buyers end up significantly emptying their pockets to make room for a new set of house keys. Closing costs for a $250,000 home range between $5,000 and $17,500, and that’s not including a down payment. Here are 7 costs to prepare for when you buy a Durham home:
Lenders have to compile a lot of paperwork to offer you a loan. A loan origination fee covers the time (and paper!) they invest in putting your loan together. Generally, these fees range from 0.5 to 1% of the total loan amount.
Before they issue you a loan, lenders want to know all about your financial track record. If you’ve been diligent in paying back past debts, you’ll probably be diligent in the future. Lenders run a full credit check before they issue you a loan, but considering the depth of this service, the fee is modest, usually around $10.
Of course, your credit report isn’t going to analyze itself. Lenders hire underwriters to judge your credit and pass essential information along to them. You will foot the bill, typically between $300 and $600.
In addition to verifying that you are worthy of a mortgage, lenders will also want proof that your home is worthy of a mortgage. If the lender has to foreclose on the property at a later date, they want to be able to make their money back by selling the home. A third-party home appraiser will be hired to scope out the home you want to buy. You can expect to cough up $300 to $400 for the appraisal.
After your home has passed its appraisal, a home inspector will be called to delve deeper into any issues there might be with the Durham home. This is your chance to make sure your dream home is as dreamy as it seems. The inspector will issue you a detailed report of all findings; you can use this report to negotiate contingencies or price reductions with your seller. Expect to pay $300 to $500 for a general home inspector, but be prepared that your general home inspector might refer you to a specialist inspector (for your mold and toxins, pests, septic system, etc.), which will mean more money.
A metaphorical crack in your Durham home’s foundation can be as damaging as a literal crack, which would be turned up by a general home inspector. Lenders use title searches to unearth any cracks in your home’s legal status. If there are liens against the home, the seller might not have the right to sell. You could end up in a legal dispute for home ownership. Expect to pay $75 to $100 for your title search.
Survey feeds are paid out to a professional surveyor to verify that your property has respected all property lines. An errant fence, driveway, or water heater could cause legal conflict down the road, so if any issues are turned up by the surveyor, they must be resolved before you can close the deal on your home.
When you prepare to buy a Durham home remember to allot money for your closing costs before you pursue a mortgage. If you come up short, you won’t be able to close the deal. Even are you close the deal with an empty bank account, you might struggle to meet your first few monthly mortgage payments.