Continuing where we left off last time, this post series is intended to help you avoid some of the most common mistakes I have seen homebuyers make. We have talked about Mistake #1: Not getting pre-approved, Mistake #2: assuming all lenders are the same. This week we are moving on to Mistake #3: mortgage costs.

Mistake #3:  Assuming your down payment is the only immediate cost of the loan.

You may be surprised to learn that it costs money to borrow money, in addition to the interest rate you are agreeing to pay. While you have diligently worked to save money for your down payment (which is totally awesome!), there are also other mortgage costs to consider.

Expect to pay the following in closing costs:

  • Recurring costs
    • property taxes
    • homeowner’s insurance
    • private mortgage insurance, if required
  • One-time closing costs
    • appraisal
    • lender fees
    • escrow fees

 

Outside of loan costs, are you getting a home inspection? This is highly recommended, especially if there is a well or septic tank on the property. If so, prepare for $300-1,000 in inspection fees outside of loan costs. This can ultimately save you far more in maintenance costs over the long term—even if it requires a small investment up front.

Ask your trusted loan officer for a full estimate showing a breakdown of all your associated costs BEFORE you submit an offer. If you’re not getting the details you need from your current lender, I would love to help you with any questions you may have. Please do not hesitate to reach out to me directly!

Be sure to check in next week for the last mistake you can hopefully avoid.