What Costs are There Before Securing a Mortgage?

Securing a mortgage to buy a home is probably one of the best and most important milestones in a person’s life. It comes with a lot of benefits and bragging rights.

But, even with all of the butterflies and feelings of being on cloud nine, the truth of the matter is that there are also costs in securing a mortgage — before and after the transaction.

The costs incurred before securing a mortgage.

The following are the costs incurred before you can secure a mortgage:

1. Before you obtain a mortgage, you need to pay for appraisal fees. An appraisal fee is a professional fee that you pay to get an estimated value of the house you want to buy. This one is the first step that you need to fulfill before securing a mortgage. It allows creditors to determine your loan-to-value ratio. A third party does it. The price ranges between $300 and $1,000.

2. You also need to pay for an inspection fee. The inspection fee is the amount that you spend for the potential house to get checked for leaks, pests, problems, and everything that may make or break your decision to purchase. It depends on the creditor if they require this, but it costs roughly around $300 to $500 for a home inspection service.

3. You also have to pay for your credit report fee. You may think that this should be free of charge, but it is not. More often than not, potential borrowers need to obtain a copy from each of the credit bureaus even before they apply for a loan. Some professionals would say that this is the first cost of securing a mortgage because if you have a bad credit rating, you might as well not push through with the loan. This aspect is all debatable. It will cost the borrower around $30 to $50 per report. If you are lucky, you can get this for free because some lenders cover the cost themselves as part of their credit check.

These three costs get incurred mostly before approval of the loan, and there are different costs once you get the approvals and purchase the house. The critical thing is for you to be a hundred percent committed to the purchase. Being fickle minded does not pay off in the real estate market. 

If you are still potentially on the fence with your mortgage needs, ask a real estate professional to help you decide on what mortgage options might work best for you.

Beware of the Hidden Costs of Moving

If you are planning a move you are probably busy thinking about the new costs of living, how much the rental truck will cost, packing and how you will get there. What you may not be considering is the hidden costs of moving.

Here just a few of the surprise costs of moving and some ideas on how to avoid them:

Late Fees

When you are moving things get lost in the mail or are slow to be forwarded to your new address. If you miss paying your bills on it can add up in unnecessary late fees. Switch all of your bills to online billing that way you are sure not to miss a payment that is lost in the mail.

Overdraft Fees

Don’t close that bank account just yet. You may have checks or bills still being drawn on that bank account. Leave your bank account open for approximately three months to allow all checks to clear. Doing this will help you avoid any overdraft fees.

Contract penalties

All of those contracts you have signed may come back to haunt you. Memberships at the gym, country club, day care facility, community association, etc. can cost you. Typically there is some type of annual or monthly contract associated with membership and cancelling early will usually cost you.  Some of these contracts will have an exception for a move so read the terms and conditions before you pay a hefty cancellation fee.

Auto insurance

Part of the cost of your auto insurance is determined by your address. For example, moving from an area with less population, to a more highly populated area will cost you more in auto insurance. Different states also have different laws regarding insurance coverage. States have different minimum liability requirements so in some states you will need to purchase personal injury protection and uninsured motorist coverage and in others you will not.

Health insurance

Health insurance can also change when you switch states. Just like auto insurance, health insurance mandates vary among states, too.  Some states require some types of medical procedures are covered while another has not mandated coverage.  Be sure to comparison-shop for your health insurance.

While adding up the normal costs of moving expenses like boxes and storage also be sure to check for these hidden costs and try to avoid losing money in your next move.