Forgotten Fees

No one likes surprises when it comes to the costs associated with their real estate transaction. You don’t want to make it all the way to the closing table & be surprised when you have to write a bigger-than-expected check. The best way to eliminate surprises is to educate yourself so you have a thorough understanding of the home buying process.

There are a few different categories of costs to keep in mind when preparing your budget for your new Mass. home.  Separate and apart from your down payment money, you will need to account for lender fees, attorney fees and escrows account set-up (or “prepaids”). These are standard closing costs associated with your transaction that most people understand, and that their respective real estate agent, attorney, or mortgage loan officer reviewed. There are also other costs to remember that can quickly cut into your savings if you haven’t properly budgeted for these.

Easily Overlooked Costs:

Home Inspection: A home inspection is not required when you buy a property in Mass. but it is highly recommended that a buyer have one completed for their own protection. A home inspection can range from $350 to $650 depending on the depth of the report and type of property. The inspector will look for structural problems, mold, electrical issues, water leaking or damage, and generally give you an overview of the health of the home. Radon & Lead paint tests are extra, so if you want those done as well, include those in your budget.

Home Owner’s Insurance: In Massachusetts, a prospective home owner will need to budget for and pay 1 full year of coverage either at or before closing. Depending on the type of property and coverage this can be an added expense of $450 to $1,5oo.

Flood Insurance: If the home you are buying is in a flood zone, the lender will require you to buy flood insurance. This will also need to be prepaid for 1 year. As many areas of Massachusetts are in FEMA flood zones (even if they are not waterfront), be sure you know if your dream home is.

Appraisal: The appraisal is an underwriting requirement for almost all mortgage programs and can run you between $350 to $700 depending on the property type and loan type. Multi-family properties generally cost more to appraise. Also, if the property has safety issues that were noted by the bank appraiser, these will need to be corrected, and the appraiser will need to revisit the property.

Attorney Fees: In Massachusetts, unlike most other states, an attorney is required to oversee all real estate transactions. All lenders will retain a bank attorney to protect the lender’s interest. Most clients elect to use the bank attorney but in some instances my Mass. clients feel more comfortable hiring their own attorney in addition to the bank attorney, only to have some sticker shock when there is an extra $500 to $750 added to their closing costs. Most bank attorneys in Massachusetts will review your purchase and sales agreement for much less than a separate private attorney. You absolutely have every right to have your own attorney, just make sure you understand what his or her fee is early on in the process, and how and when that payment is expected.

Fuel: This is a cost that so many first time home owner’s overlook. When buying a home that has an oil or propane tank, it is customary for the buyer to pay for the remaining fuel in the tank. This cost can be over $1,000 for a large full tank of oil so make sure to budget for this as well.

Moving Expenses: Although certainly not a cost associated with the mortgage process, moving fees can add up quickly, and if not properly budgeted for can leave you cash-strapped just as you move in to your new home.