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If you plan to purchase a house in the foreseeable future, it generally is a good idea to plan ahead for all of your potential homebuying costs. That way, you can secure the funds you need to purchase your dream house.
Now, let's take a look at three costs that every homebuyer needs to consider during the property buying journey.
1. Credit Report
A lender likely will request a verified credit report before it provides you with a mortgage. The fee for a credit report usually is minimal, but it is important to note that this fee adds to the overall cost of purchasing a house.
Oftentimes, a homebuyer can get pre-approved for a mortgage and pay a credit report fee prior to conducting a house search. On the other hand, if a buyer wants to secure financing from a lender after he or she discovers the perfect house, the cost of a credit report may be incorporated into this individual's home closing costs.
2. Home Inspection
A property inspection is crucial, as it ensures a property expert can analyze a house and identify any underlying problems with it before a buyer finalizes his or her home purchase. As such, it is paramount to account for home inspection fees to ensure you have the funds available to hire an inspector who can perform an in-depth evaluation of a house.
The cost of a home inspection varies based on the size of a residence. Meanwhile, there is no need to forgo this evaluation. Because if you ignore a home inspection, you risk encountering costly, time-intensive problems after you buy a residence.
3. Pest or Mold Inspection
A pest or mold inspection is not a requirement if you purchase a new house. Conversely, if you purchase an older residence, it typically is beneficial to inspect it for pests and mold prior to finalizing your house purchase.
Pest or mold inspection costs vary based on a home's size and location. And if you feel a home may be susceptible to pests or mold, you should pay the necessary fees to conduct a pest or mold inspection. Otherwise, you could encounter home pests or mold that may cause major problems down the line.
As you prepare to pursue your dream residence, you may want to hire a real estate agent as well. If you have a real estate agent at your side, you can receive comprehensive guidance as you navigate the homebuying journey.
In addition to teaching you about homebuying costs, a real estate agent is happy to educate you about all aspects of the housing market. Plus, a real estate agent will respond to your homebuying queries and help you make informed decisions as you search for your ideal residence.
When it comes to purchasing a house, it helps to budget accordingly. If you consider the aforementioned homebuying costs, you can craft a homebuying budget and speed up your quest to discover your dream house.
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When it comes to homeowner’s associations, you need to know what type yours is before you determine whether to “join” it. There are two types of associations, covenant-based and voluntary. When homeowners ask about requirements to join a homeowner’s association, they may believe it is optional, but if our association is covenant-based, you have automatic membership by virtue of being a property owner.
A voluntary association is a group of property owners that collectively decide how to improve their neighborhood. By the time you move into the neighborhood, the HOA may be well-established, so you’re not aware of how it started. Such HOAs are more similar to neighborhood improvement clubs, local sports team sponsors and other folks that join in order to develop a sense of community.
A covenant-based HOA is a contract that is part of the land purchase agreement within a development. That means that all property owners automatically must retain membership and that agreement is binding on all future owners within the specified development.
You might question how a contract is binding on future owners, but in the case of a covenant-based homeowner’s association, the covenant “runs with” the property as recorded in the county land records office. The document that spells out the covenants attaches to the property deed. When you buy a lot or home in the development, the original deed and any liens or covenants that attach to it become your responsibility.
Often, the original developer set up and controlled the association until the last piece of land sold or a sufficient number of homes sold so that the running of the association could transfer to the owners. Typically, these determinations are part of the original covenant documents filed with the county records. HOAs run by a board of elected owners from within the development. Unlike a voluntary association, renters or leaseholders cannot become members even though they are bound by the rules and conditions of the association.
Before you choose to purchase a home in a neighborhood with an association, learn whether it is voluntary or covenant-based. Ask to see copies of the covenants, conditions and rules (CC&Rs) before you commit to purchasing in that development. Your real estate agent can write a contingency into your purchase contract to require approval of the CC&Rs if you’re concerned about living within the HOA.
