I'm a Real Estate Agent: Don't Buy a House If You Need To Pay … – Yahoo Finance

Navigating the homebuying process is no small feat, especially when hidden costs can easily throw you off budget. Broker fees, high loan expenses and unexpected maintenance costs are just a few of the financial traps you could encounter.
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Knowledge is your best defense against these hidden costs. By recognizing what fees you should never pay, you can make smarter financial decisions.
“A cost that all homebuyers should avoid paying is the broker fee, which can range anywhere from $199 up to as high as $1,000,” said Jason Gelios, a senior real estate specialist.
“You typically see real estate agents trying to justify this charge by stating their broker has to charge this fee to keep the lights on. In reality, it’s a junk fee and can almost always be waived,” he continued.
“Homebuyers can locate this fee by simply looking at their buyers agency agreement. Home buyers should never pay a broker fee to a real estate agent. If the agent is unwilling to budge on this fee, then that’s an indicator it’s time to locate another agent.”
Bethany Stalder, a realtor with Fidelis Property Group at Keller Williams, said, “When applying for a loan, be mindful of any fees the lender may charge, such as origination, application, or broker fees. Compare at least three lenders to find the best deal.”
In addition to that advice, Stalder also said, “lenders may have to charge points in order to secure the interest rate that they’re quoting you — a point is equal to 1% of the loan amount and gets added to your closing costs in order for you to obtain a certain interest rate. This is very common, and yet you need to understand this cost in order to do a true comparison between lenders, so be sure to talk with your loan officer about it.”
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“Don’t overlook potential maintenance and repair costs,” added Stalder. “Have a thorough home inspection to uncover any hidden issues that could create surprise costs once you move in.”
It can be tempting to buy more house than you need or excessive luxury features that stretch your budget.
Stalder explained, “We often see this happen with condos — buyers fall in love with a home in a particular condo community, but that community may come with a high monthly maintenance fee that supports amenities like a pool or a clubhouse. But if you won’t use these amenities, you’re elevating your monthly payment without really getting additional value. Stick to your budget and prioritize what’s essential for your lifestyle.”
“The single most important cost I continue to tell people to avoid is the cost of the house itself,” said Cody Smith, a realtor with RE/MAX.
“When getting pre-approved, it’s important to discuss all options and costs with your lender and making sure that your mortgage payments and all associated housing costs (taxes, insurance, etc.) are not going to eat up all of your income and leave you what we call house-poor,” Smith said.
“These are the people who are most at risk of defaulting because they’re so susceptible to missing not being able to afford their mortgage if something changes (increased rates, utility costs rise, loss of income).”
Smith also warns that higher than average interest rates can be crippling on your purchase.
“There are often alternative mortgage options through secondary or B-side lenders, or perhaps private lenders, which can result in getting a higher pre-approved price,” Smith said.
“These usually result in some significant cost increase, though, like a higher-than-usual down payment or higher interest rate. These can result in paying much more over time, or emptying out any safety net you may have saved up.”
Homeowner’s Association (HOA) fees should always be considered before purchasing because, as Smith said, they “can vary greatly depending on the property, so it’s important for your agent to know what an average cost in the area is.”
Pay attention to what the fees cover and know that an increase in the fees may be due to more services being provided. “Either way,” Smith continued, “these costs can sometimes increase your monthly homeowner costs by a huge percentage.”
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This article originally appeared on GOBankingRates.com: I’m a Real Estate Agent: Don’t Buy a House If You Need To Pay These 7 Costs
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