Purchasing Fees

Frequently when purchasing a new home, or if you are a new home buyer, buyers do not pay attention to all the extra fees that are included in the purchasing process. The following is a list of common fees to be aware of:

Loan Application – applies to many types of loans and is for the costs to process only the loan approval and is nonrefundable. Many folks shop for lenders since this fee can vary from $0-$500; the lowest tending to be on-line lenders.

Title Services – title companies do a background check or “title search” on the property to be purchased to make sure you are able to buy it free of liens or issues on the title and often will perform the closing itself. A few days before closing they will provide a settlement statement which itemizes all fees, credits and final amount due at closing. This fee is on a sliding scale depending of the total purchase price of the property and required services, but often starts around $500 on up.

Home Inspection – a contingency in a Buy/Sell that entails hiring a home inspector to identify any possible issues with a home. Depending on the size of a home and any other structures a buyer may want inspected on the property, an inspection can range about $300-$550; fee depends on the scope of work. This fee is paid at time of service or sometimes can be included in the costs at closing.

Appraisal – this is a report provided to the lender at their request, usually, during the lending process to identify the value of the home/property. Like anything else, fees can fluctuate depending on scope of work, but in NW Montana a typical home appraisal fee starts at approximately $450-$600.

Property Survey – this is when a surveyor determines or confirms the boundaries of a property. They can provide a Certificate of Survey identifying physical features of a property such as easements, waterfront footage, property dimensions and a full legal description. Surveys may be requested by a buyer and can be paid by either a buyer or seller depending on the purchase agreement. Fees start at a couple hundred dollars and, again, depend on the scope of work required.

Lender’s Origination Fees – this is for the lender processing the loan which entails collections of all required documentation on the borrower, submitting docs to underwriting (who will approve or deny the loan) and then funding the loan. This fee is typically 1-3% of your total loan amount.

Private Mortgage Insurance (PMI) – This is an additional fee added to your monthly mortgage payment when funds of less than 20 percent is put towards the total purchase price loaned on the property. It is an insurance policy on the loan to protect the lender in case of foreclosure and is about 0.5-1.5 percent of the loan amount paid yearly (divided over 12 months).

Property Taxes – a small fee to bring all property taxes due current and paid.

Feel free to ask your real estate broker/agent to provide you with an itemized estimate of fees that you may be subjected to with your intended property purchase.

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