The True Cost of Buying Property
As well as the cost of the property itself there are other expenses related to the purchase. There are the inevitable taxes, title insurance, inspections and transfer fees.
Title insurance is normally required by lenders to insure against any defects in the title. It is set as a percentage of the property price and is currently set by the state at 0.5% of the purchase price. In most European countries the government controls and records land registry. In most states of the US this doesn’t happen as the government didn’t want the hassle, and the expense of running such a system. The land titles are recorded by a local recorder in the county of the property. The insurance is to protect the buyer and the title against inefficiencies in this system.
If you are buying your property with a loan then there will be fees to pay there also. Generally in the region of $1200 including the appraisal. Not forgetting mortgage tax too, which will be another .35%.
Title and closing costs for rounding up and completing the deal will be another $500-$600. Then the Transfer Fee if the property is part of an homeowners association. This is just to cover the paperwork and because they can. Depending on where the property is, it can be a $100 or $1000 and more.
Home Inspections are an expense but for once it is one that actually benefits you. A good check of any prospective property is essential, especially if you are borrowing to pay for it. A basic home inspection can run you $200 upwards, whereas a full inspection can cost over $1000.
So you can see there is much more expense is buying your own home than just the cost of the property itself!
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