This 12 issue newsletter focuses on ways to get the most out of your home, by giving current and timeless advice on refinancing, buying your first home and how to avoid common mistakes made by homeowners, wannabe homeowners and renters. So whether you are buying, refinancing or thinking about either, every issue covers a topic that will help you no matter what stage of homeownership you are in.

ISSUE 3

CONSIDER HIDDEN COSTS WHEN BUYING A HOME

Homebuyers, especially first-timers, often are not
prepared for the additional costs involved in purchasing property. While the purchase price of the home is by far the largest cost, it's important to take into account the numerous direct and indirect expenses related to getting a mortgage and gaining ownership. While different costs will apply in each case, here's a list of things to budget for:

APPRAISAL FEE

Before lending you any money, most finance companies will have their own appraiser determine
the value of the property. The borrower pays the
cost of the appraisal which will be at least a few
hundred dollars.

LAND SURVEY FEE

Many lenders require a plot plan or survey of the
property you intend to purchase. The survey confirms the property's boundaries and ensures there are no structures, like fences, in the wrong place. If the property is located in a subdivision in an suburban area, some lenders will accept an existing survey as long as it was done within the past five or ten years. Many times lenders will waive this requirment as long as the survey "endorsement" can be added to the purchasers title policy (very small fee)

INSPECTION FEE

Before issuing a mortgage, some lenders may require a professional inspection of the home. For peace of mind, you may want the home inspected anyway. Regardless of how well we look at a home, few of us have the training to uncover major structural flaws and maintenance problems that are not readily apparent. Ask your REALTOR or lawyer to add a conditional clause to your offer to purchase, making it subject to a satisfactory home inspection. It's well worth the cost, which is usually no more than a few hundred dollars.

MORTGAGE INSURANCE

This protects the lender against default when you apply for a high-ratio mortgage (where you put down less than 20 percent of the appraised value or purchase price). The cost can vary widely depending on your past credit recrod and other factors.  The charge is usually relatively small and is added to each payment you make until you have built up enough equity to satisfy that your m0rtgage is less than 80% of the value of the house.  Under President Bush's tax act of 2007 it is usually tax deducatble (consult your tax advisor).

MORTGAGE LIFE INSURANCE

This is a form of term life insurance that pays off the balance owing on your mortgage if you or your co-borrower dies. Many lenders offer you the option of buying this insurance and adding it onto your monthly payments. You may prefer to protect yourself by taking out your own policy instead. Talk to your insurance agent.

FIRE AND LIABILITY INSURANCE

Most lenders require that you carry fire and extended coverage insurance that well exceeds the outstanding balance on the value of the home. You'll want to have fire and weather-related damage protection any way. Public liability is often included in home insurance coverage and you may want to have this as well.

LEGAL FEES/SETTLEMENT AGENT FEES

Your lawyer/title company  is a key part of your home-buying team. You can expect to pay all legal/settlement fees required to arrange the mortgage, as well as "disbursements" - the costs involved in conducting a title search, drawing up the title deed, and preparing and registering the mortgage. These are always included in your Good Faith Estimate that you receieve from your broker/lender.

OTHER COSTS

These include the cost of adjustments to property taxes, utility bills, heating oil, etc., for which the seller has already paid and will want credit for the unused portion. To avoid any surprises, ask your Lender/Broker to explain each cost that you're likely to incur.

MAINTENANCE AND UTILITY COSTS

In addition to budgeting for your monthly mortgage
and property tax payments, you'll have to budget for the monthly cost of heating, electricity and related costs of your new home.