The best investment you can ever make is buying a home. You are delighted that you found the perfect home for you! The neighborhood is fine, the house is beautiful and the price is right.

However, the asking price is just the start. It is important to be practical, about additional expenditures, which is often unforeseen. Don’t worry homebuyers. If you know what to look for, they can be easy to avoid! We have mentioned a few hidden expenditures that we believe every homebuyer should know about.

Origination Points:

The lender charges a fee that is called the Origination points for checking processing and approval of the loan. 1 percent of the overall mortgage is equivalent to one point. So, if $100,000 is the total mortgage, one point will cost the borrower $1000. Basically, those points trim the interest rate on the loan. Borrowers can purchase fractions of the point as well.

Getting a rate from three separate lenders is important. This will allow you to compare the prices and obtain the best offer. You may ask the lender to include any closing costs in the origination fee, which is a big saving on costs.

The origination point fee cannot be entirely avoided, but one thing you can do to minimize its effect. Be sure not to add and pay in advance the points in your loan payments because even a single point will make up to $2500 in interest.

Property tax:

There is a certain amount of money that is paid to the government for owning a property. Property tax is determined by the town or country where the house is situated. For example, the average effective tax rate is 0.72 percent in the state of Arizona. property tax is applied to the monthly mortgage payment in most cases.

The rate of tax is determined by your home value. If there’s anything that you can do to reduce the tax is to stop the local government from raising your home accessed value, this will keep your tax rate lower. Making an advance payment for the taxes will also reduce your monthly payment and give you more cash power.

Home owner’s insurance:

Here’s an example, if you’re a homeowner and your house burns down, it will totally be your loss. If you had it on a mortgage, it would be a loss to your lender. Basically, insurance is only for the lenders’ protection. That’s why lenders or mortgage firms make sure you are covered by Insurance. Just like the property taxes, Home insurance payments are also rolled up in your monthly mortgage payments.

The average yearly premium for home insurance varies from state to state. It’s about $825 annually in Arizona. This rate depends on the mortgage firms, so I will recommend to homeowners that they can search around and get the best possible rate possible. If you don’t have insurance, this also gives the lender the legal right to purchase insurance for you, and he will get it at a punitively high rate which will automatically increase the mortgage payment costs.

With no home insurance policy, you can legally purchase a home. You wouldn’t have to cover the home insurance costs at all if the lender agrees to proceed with the deal without the home insurance.

Funding the Escrow Account:

Some lenders insist that an escrow account be set up in compliance with the mortgage loan agreement. You are expected to make an actual deposit at the closing table in your escrow account. The lender uses this money to cover land-related costs on behalf of the homeowner, such as property tax, home insurance premiums, etc.

So, in addition to the mortgage payment to the lender, the homeowner is required to pay a little extra, raising the monthly mortgage. You may ask the lender to waive the requirement for an Escrow account. You can provide evidence to the lender that you have made timely payments for your taxes and insurance, this will gain the trust of your lender and he might cancel the escrow account.

Bunch of closing costs:

Beyond the main fee, there are extra charges that add up to hundreds and thousands of dollars.

• Application fees
• Assumption fees
• Appraisal fees
• Attorney’s fees
• Broker’s fees
• Prepaid interest
• Title cost
• Mortgage broker fees
• Cost of inspection
• Lawyer fees
• Recording costs
• Document fees
• Surveyance fee
• Title cost
• Home warranty

You need to have a full list of all the charges the lender demands. Understand and discuss with them each fee. It’s going to help you save a few thousand bucks. You may not be able to eradicate all the hidden expenses but that does not mean you shouldn’t even try. It is believed that this mortgage game is supposed to be profitable for the lenders. Even a slight reduction would save you thousands of dollars over the life of your loan.