Sneaky Homebuying Fees that You Never Get Back

I bet you’ve heard this before: “Renting is like throwing money away!”

Well, I couldn’t disagree more. That’s like saying that you are throwing money away buying food because when you eat it, it’s gone. Guess what? There are costs to living. And that includes the roof over your head. There are even home ownership costs you don’t get back.

Buying a home is the biggest money decision you will ever make. Don’t take it lightly, and remember that it’s not about playing house. Buying a house you can’t afford can sink you into financial prison, no matter how nice it is.

Now, homeownership can be the right thing for you, after all. Just know, though, that nothing in finance is one-size-fits all, especially when it comes to buying versus renting your home.

Even if you aced the quiz, there’s still more to consider. Wait, there’s more? Well, yes—as with most big purchases, there are some sneaky costs associated with home buying that most people forget to factor in. Beyond having money for the house itself (whichever way you go on the down payment), you have to prepare the closing costs. These are approximately 3% of the overall purchase price…which can be as much as $10,000 on a $350,000 house in JUST closing costs on top of the down payment.

Here are some of the fees that fall under the closing costs umbrella:

  • Lawyer’s fees. Depending on how complicated the sale is (or how savvy your realtor is), you may need to hire a real estate attorney to draw up contracts and negotiate terms with the seller.
  • Home appraisal fees. Don’t buy without finding out if the house is structurally sound. Once you close, anything wrong with the house is your problem.
  • Property survey fee. Know where the property line is so you don’t accidentally build a fence or plant on your neighbor’s property.
  • Home inspection. Make sure the property is in the condition the seller says it is, and uncover any potential problems before you buy.
  • Pest inspection. Termites? Other house-wrecking varmints?
  • Local property taxes. Vary widely based on where you live.
  • Local sewer fees (unless you have a septic tank). I know, romantic.
  • Homeowners insurance premium. Just like a car, you can’t complete the purchase of a house without proof of insurance.
  • Title insurance. Insurance for the amount of the mortgage loan, and protects the lending financial institution’s investment. It can also protect you as the owner for the price of the house. This is why you need a real estate attorney–more potential problems, more money.
  • Realty transfer fees and clerk fees. These go to the local municipality for merely recording the transfer of deed and mortgage. Really.
  • Miscellaneous fees. Potentially being charged for heating oil the seller left in the tank. Or other random (yet expensive) fees like that.

Homeownership can be an exciting part of your life, as long as you make sure that it’s the right thing for your money story. Just remember: your home is a place to live, not to get rich. So plan for it like a pro.


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