If you’re in the market to purchase a new home, you no doubt have given your budget a consideration. At this point, you probably have a pretty good idea of how much you can afford, how much you have ready for a down payment, and how much you are able to pay for your mortgage on a monthly basis. What you might not have factored in, however, is all of the other costs associated with buying a home other than the price tag itself. Here are some costs that you should think about before committing–
The Cost of Interest Over Time
Perhaps the biggest expense that new homebuyers fail to factor in is the cost of interest over time. Even if you’re given a great interest rate – which will probably only happen if you have a good credit score (above 750) and are able to put 20 percent down on your new home – you will likely still end up paying thousands of dollars more than the value of your home over the course of the loan.
Consider this: Buyer X wants to purchase a $300,000 home. The buyer has $60,000 cash needed for the down payment, but wants to borrow $240,000. Luckily, Buyer X has great credit, so the bank offers him a mortgage with a pretty low interest rate – 3.92 percent. While this may seem like a great deal, over a loan period of 30 years, Buyer X will end up paying $408,512 for their home, a whole $108,512 more than they thought.
Another cost that you need to factor in when buying a home rather than renting are the costs of property taxes. Property tax rates vary depending upon where you live, but in Boston, the tax rate for the fiscal year 2017 is $10.59 per $1,000 of value. This means that if you own a home that is worth $200,000, your property tax for 2017 would be $2,118. This can change on a yearly basis, and is an expense you should be prepared for.
When you are buying a new home, you will have a number of closing fees that can add up. These include:
- Title insurance;
- Loan origination fees;
- Underwriting fees;
- Appraisal fees;
- Recording fees;
- Notary fees; and
Typically, the buyer has more closing costs than does the seller. Because the state of Massachusetts also requires that parties at the closing table be representing by closing lawyers, this is another cost to consider.
Protect Your Best Interests When Buying a New Home
Buying a new home is exciting, but understanding the multiple fees and costs can be confusing. When you are thinking about a new home in Boston or surrounding areas, working with an experienced closing lawyer is a must. At ClosingLawyer.Pro, we protect your best interests throughout the entire process.
To learn more, call our team today or visit us online. A consultation with our law firm is free!