Prospective buyers likely know that an approved mortgage is just the first step. Other costs can come up before we finalize the sale of a home. Some that often comes as a surprise can include:
- Down payment. This portion is generally separate from the mortgage. The buyer pays this upfront, often a percentage of the total offer price.
- Closing costs. These expenses come after the accepted offer and through the finalization of the sale. They can include the cost of an inspection, title search, and title insurance.
- Insurance. Budgeting for homeowners and private mortgage insurance (PMI) expenses is also important. Mortgages are often contingent on the buyer having both policies in place.
Buyers can better prepare for these expenses and mitigate the risk of any surprises with a bit of due diligence.
What could go wrong?
The title search is one of the biggest areas that can lead to surprises. This process involves reviewing the ownership history to ensure no one else has a legal claim to the property. A common issue is a subcontractor or contractor who completed work on the property but did not receive payment. This individual could file a lien against the property for payment — something that should appear during a proper title search.
Another example is the potential for a lack of disclosure. State law requires sellers to disclose certain issues with the property. Failure to do so can result in issues after the sale. Buyers have options for legal remedies in these situations, including a lawsuit to help cover the funds to remediate the issue.