![]() Many HOAs require the buyer to pay a fee or a portion of their annual dues at closing. If your neighborhood has a homeowners association, the association may charge a fee to help cover services and capital improvements. If you choose to purchase a home warranty on the property, the premium may be included in your closing costs. If your property is in a flood zone, your lender may require you to purchase flood insurance, which will also increase your costs. This fee is paid to a third party to determine whether the property is located in a flood zone. Many lenders pass the cost of accessing your credit report and credit score on to you. This fee covers the attorney’s time spent preparing and reviewing all closing documents. Some states require the buyer to be represented by an attorney. Paid to a professional appraiser who gives the lender an estimate of the home’s market value. You’re also expected to show up at closing with an additional chunk of cash to cover certain costs payable to the lender and other parties. ![]() If you clear out your bank account for a whopping down payment, hold your breath - because there’s more. On a $250,000 mortgage, that can increase your monthly mortgage payment by up to $175. The cost of PMI varies, but according to Freddie Mac, you can expect to pay $30 to $70 per month for every $100,000 borrowed. Either way, it will increase your out-of-pocket costs. Some lenders require an upfront premium when you purchase the home others collect it in monthly installments. ![]() PMI protects the lender against losses if you default on your mortgage. Sign Up NowĪlthough there are exceptions, almost all lenders require private mortgage insurance (PMI) if you’re making a down payment of less than 20% of the purchase price. For $79 (or just $1.52 per week), join more than 1 million members and don't miss their upcoming stock picks. Motley Fool Stock Advisor recommendations have an average return of 397%.
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