The housing market in Denver is rough, but you did it. You’ve increased your credit score, saved for the down payment, and have picked your dream house. You’re ready to sign, right? Perhaps not. Many Denver home buyers forget these five hidden costs of home buying and are thrown off when it’s time to close. Read on to get ahead of the game and save in the long run.
A home inspection is recommended before purchasing a home to reveal any significant issues that the seller was unaware of or did not disclose. If the inspection reveals anything undesirable, you can either walk away or add a clause in the contract to have the seller fix it. In Denver, the cost of an inspection for a 2,000 square foot home is about $270- $345.
Homeowner insurance is required by the mortgage company to protect the home if something goes wrong. Most mortgage companies require the first year of insurance to be paid in full which will run you an average of $1,400. If you do not get your own, the mortgage company will assign you an insurer that will probably cost more money.
Closing costs are the fees for the real estate transaction. These can include loan origination fees, title insurance, and deed-recording fees to name a few. With closing costs typically ranging from 3%-5% of the home price, expect to pay an average of $12,000-$15,000.
It is possible to save money on home loans. Having a good credit score will help you qualify for a more optimal loan. If you are a first-time homebuyer, you may qualify for an FHA loan. Also, according to Low VA Rates, you can save around $172 per month on a Colorado home if you qualify for a VA loan. Even if you don’t qualify for special financing options, you can always save more money and pay for points to lower the interest rate.
As of 2017, you will have to pay 7.20% of the assessed value in property taxes in Denver, but did you know that the buyer must reimburse the seller for taxes they already paid? At closing, you will be responsible for repaying the seller any tax money they paid starting from the date of the sale to the end of the tax period.
Many lenders want to know you can be trusted to pay your mortgage each month. This is why some require you to have cash reserves in a liquid account—usually totaling two to six months of payments—before closing.
Before you settle on a home, look into some of these expenses in your desired neighborhood so you are ready when the time comes to close.
Are you ready to find your dream home in Denver, Littleton, or Boulder? Contact Denver Lifestyle Real Estate to see what homes are waiting for you!