Payments and Fees to Expect When Buying a House

Down Payment: Different banks, loan types and types of properties will all have their own different requirements for down payment that range from 3% to 20% or more of the purchase price.

Principal and Interest: Depending on your loan structure, typically paid monthly… 

Taxes: You can expect to pay the amount of property taxes assigned by the County Assessor through your escrow. These can fluctuate year to year, and also will be adjusted if you make any improvements or changes to said property. 

Homeowner’s Insurance: Usually required before you take possession of your new home, prices vary depending on where you live, the value of your home and what company you’re with.

According to Bankrate: “The average cost of Colorado homeowners insurance annually is $1,495, several hundred dollars above the national average cost of home insurance, which is $1,211.”

Private Mortgage Insurance (PMI): Insurance for the lender to protect against non-payment. 

According to Bankrate: “…the average range for PMI premium rates was 0.58 to 1.86 percent as of November 2020. Freddie Mac estimates most borrowers will pay $30 to $70 per month in PMI premiums for every $100,000 borrowed.”

This charge can be avoided by putting 20% or more down, or by cancelling when you do reach a 80% Loan-to-Value ratio. FHA loans require PMI for the life of the loan.

Points / Origination Fee / Discount Fee:

The fee charged by your lender for processing the loan. 

According to Investopedia: “An Origination Fee is typically 0.5% to 1% of the loan amount and is charged by a lender as compensation for processing a loan application. Origination Fees are sometimes negotiable, but reducing them or avoiding them usually means paying a higher interest rate over the life of the loan.”

Credit Report: An up to date report from one or all of the major ratings agencies is most always required by lenders.

Title Policy Search: According to Investopedia: “A Title Search is an examination of public records to determine and confirm a property’s legal ownership, and find out what claims or liens are on the property.”

Title Policy Insurance: “Title Insurance protects both lenders and homebuyers against loss or damage occurring from liens, encumbrances, or defects in the title or actual ownership of a property.”

Survey: If one doesn’t already exist, buyers may want to get a survey to determine the exact boundaries of the property. According to HomeAdvisor, typically the charge for this is about $500 per acre, but could be more or less.

Appraisal: An Appraiser is an independent party that generates a fair-market-value report. 

According to Bankrate: “A typical, single-family home appraisal will range from $300 to $450 and can vary depending on a number of factors, including the size of the home, the value of the property, condition of the property and the level of detail involved in the appraisal. A large home or property can impact the cost of the appraisal. In larger cities or areas of high labor costs, the range may be significantly higher of $500 to $800..” 

Escrow: Escrow is the entity that holds the initial payment while the transaction is finalized.

Legal Fees: Some transactions are more complicated than others and may require the services of an attorney. 

Property Tax: Property tax is always prorated on the closing statement and will either be a credit or debit.

Colorado State Recording Fees: Up to $200

Notary Public: Notaries verify your identity. Typically about $125

‘Document Preparation’ & Other “Junk Fees”

Some lenders have this, others don’t. Some roll these costs into the Origination Fee—either way they often come as an unpleasant surprise, so be sure to ask your lender about them in advance of closing.

Propane: If the home uses propane, then the remainder of what’s left in the tank at the time of sale will have to be reimbursed to the seller. 

…Other miscellaneous fees may apply as well on a case by case basis.

Give me a call anytime to chat about any of this, or anything else in the real estate world.

(719) 422-3116 / SARAH.MANSHEL@GMAIL.COM