Additional Expenses That a Homebuyer Should Include In Their Home Buying Budget

Buying a home is a very lucrative and rewarding venture, but the process usually involves a stream of expenses. Most of these expenses are not so obvious to the new home buyer, and they are easy to ignore. Other expenses seem so small, but they can add up to quite an amount. The additional expenses can disorganize your budget, and you may struggle financially during the process. It is important to familiarize yourself with all the costs involved so that you can plan your home buying budget accurately. The following are common expenses associated with home buying in South Carolina:

Escrow or earnest funds

This is a show of commitment from the buyer that they are willing to proceed with the home buying process. It is given to an escrow agent as a deposit after the seller has accepted the buyer’s offer. The escrow agent can be a real estate agent, a broker or an attorney. Earnest money is not usually paid directly to the seller.

Loan-related fees

A home buyer may ask for a loan from a financial institution in order to finance the home they want to buy. However, before the lender approves the loan, the buyer will have to pay certain expenses. In some cases, the buyer will be asked to pay an application fee before their loan request is considered. Other loan-related expenses include tax service fees, wire transfer fees, processing costs, documentation costs, and underwriting costs.

House appraisal payments

A home appraisal is necessary, as it ensures that the buyer pays the real value of the house. Most lenders will request for a thorough appraisal of the home before they approve the mortgage loan. The lender is usually responsible for choosing the appraiser. However, the buyer will be required to pay for the appraisal services.

Credit report

A loan can only be issued after the lender has assessed the credit report and determined that the buyer is creditworthy. This report usually has details on all the loans that the borrower has, how much debt they have in proportion to their income, and their commitment to repaying their loans on time. The lender will ask the borrower to give them permission to pull out the credit report, but the borrower will pay the related costs.

Home inspection charges

The home has to be inspected to ensure that it meets certain building codes and regulations before the lender approves the loan. All inspections must be done before the inspection contingency date. All lenders in South Carolina will ask for a Wood Infestation Report, which is often called the CL-100 letter. The prospective buyer can also ask for a lead paint report in order to ascertain that lead-based paint was not used to paint the house. They can also ask for other inspections in order to ensure that the home is habitable.

Homeowners’ Insurance

This is an important insurance that all homeowners must have. Most lenders will not approve a loan if the homeowner is not insured. The buyer has to ensure that the home is insured. In case the seller has this type of insurance, they should submit proof to the lender.

Third party charges

There are other third party costs that the home buyer will have to pay. They include employment verification charges, survey charges, and courier or postage charges. In South Carolina, the home buyer will also have to pay in order to get the South Carolina flood certification. All of these charges could sum up to an extra $500.

Attorney’s bill

An attorney is often the settlement agent in most South Carolina home buying transactions. They are responsible for a lot of things. They have to search the title and ensure that it is listed under the home seller’s name. They also have to clear the title and the property. They will prepare the property transfer contracts and supervise the signing process. They will also record all of these transactions with the relevant municipality. After the sale is complete, they will start the name changing process on the property’s title deed. At the end of it all, the buyer will be billed for these services.

Closing charges

In addition to the above costs, there are other closing fees that the home buyer will be required to pay. These include title binder charges, archiving charges, mortgage recording charges, title exam fees, settlement fees, and the realtor’s commission. The commission that is paid to the realtor could be an agreed percentage of the buying price, or a flat figure.

Conclusion

There is no arguing against the fact that a home is a solid investment. However, the process of buying a home can be very stressful, especially for a person who has not budgeted properly. This is why it is important to know all of these additional expenses so that you can include them in your budget.