Cost of Buying a Home: What are the Extras?

Buying a home can be an exciting time for it is a milestone in your life. Even if you are not a first-time buyer, it is still an exhilarating prospect to buy another home that would become your perfect abode. Alas, buying a house can also turn stressful as, after the agreement to buy, there are still things that you must fulfill. You do need to pay the agreed purchase price, hire a title company to draw up the papers, ensure the legality of everything you’ve done and more importantly, add home insurance, if applicable.

Process

The process of buying homes differs in each country. In the USA, the ball gets rolling by researching properties for sale on real estate properties online and listings published on the net or in newspapers. After assessing how much you can afford to pay back, you go to a bank or a financial institution to get prequalified and preapproved for a loan.  An offer is then made for a home that you are interested in through a real estate agent. A home inspection is also part of the deal so that you can see if there are structural damages giving you the opportunity to withdraw your offer without a penalty. At this point, you can agree whether there are repairs that need to be done. After this, the house goes into escrow. Typically, the seller pays real estate agent fees & the house inspection while the lender takes out the appraisal of the house and costs of admin work done by a title company on your loan.

Insurance

Before a home sale is closed, there are other costs that a homebuyer should pay. The loan origination fee, appraisal fee, tax service fee, settlement fee, title insurance, home inspection and mansion fee (if house value is greater than $1) are part of closing fees that are typically shouldered by buyers. A title insurance protects the lender from any liens or encumbrances that may arise during the title search.

Then comes the insurance part of the sale. In the USA various states do things differently compared to to elsewhere within the country or even overseas. For instance, NJ property owners must insure home acquisitions if there is a loan or credit attached to the property. However, it is not mandatory to do it if you paid for your home in cash. There is no law that states to this effect. Most homeowners prefer to pay for insurance for their piece of mind by insuring buildings and their contents. Factors such as location, vulnerability to fires & floods, natural disaster increase the need to get a home insurance to protect investments.

In Europe, the process of buying differs from country to country. EU countries have harmonized laws but there are still differences in home acquisition and the extra costs associated once a deal is closed. In Belgium, for example, it is not a legal requirement to take out insurance but the bank will usually require it to protect their money. Unlike their American counterparts, a home inspection is not formal.  The lender requires an appraisal of the property but the inspector will not tell you if there are structural damages. Architects can do this function as residential surveyors are not common. Both parties, sellers and buyers work through notaries.

Purchasing a home comes at an extra price including home insurance, home inspection, and processing fees. Don’t forget other hidden costs after you own your home including property taxes, maintenance and remodeling expenses. Preparing yourself for these expenses ensure that you can cope adequately with the stress a home purchase may unwittingly bring.