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.