February 28, 2024
An FHA loan has several expenses including an appraisal, home inspection, and title search expenses. These costs are not standardized and may vary depending on where you buy the home.
Aside from more obvious issues like FICO scores and how the lender uses them to determine your mortgage interest rate, what are some considerations to make in this area?
We examine some key factors below.
Location Counts
One big factor in your costs for a mortgage? Where you conduct the transaction. As mentioned earlier location may play a role in the costs.
And some borrowers assume that a service will cost more in a high-profile housing market. For example, a title search in California. Is this likely to cost more than one in Idaho? In some cases, the assumption isn’t a safe one to make.
Two mortgage-related sites, Rate.com and ProTitleUSA, report on the costs of title searches.
In general such mortgage services are priced between $100 and $250. And that is actually a fairly standard dollar amount between the California and Idaho markets.
Let’s review the cost of a standard part of buying a house, the home inspection. In California, that cost is estimated at a cost between $325 to $450.
Compare that to the state of Idaho, Costs there are reported to be approximately $100 more.
House prices AND the fees for doing business with the local appraisers and other service providers may vary depending on what housing market you want to buy in.
Market Demand Is An Important Factor
Demand could also affect how much your home loan ultimately costs, starting with the house sale price. A more competitive market means sellers can charge more.
In housing markets with great demand for mortgage services (including agents, FHA fee appraisers, and home inspectors), costs are likely to be higher in those areas if there is a shortage of service providers.
Consider the real estate agent fees in California compared to a much different housing market in Idaho. California is a bustling real estate market, and that would lead one to believe prices will be higher.
However, there may be more service providers available than in Idaho. Service supply means less competition for the same pool of resources and potentially lower prices as a result as we will explore below.
Commissions
In California, how is a real estate agent’s commission calculated? It’s typically between 4.25–5.45% (commission.)
Now, view that figure side by side with what Idaho real estate agents earn, which is reported (by Redfin) to be approximately 5.50%.
And then there’s the Idaho housing market inventory, which, according to Redfin, had some 6,600 homes for sale in January 2024.
Comparing those numbers with California, we learn that in January 2024 the California Association of Realtors noted approximately a quarter of a million home sales in that month alone.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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