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Don’t let surprise costs of your home purchase shock you

If you’re buying a house, the total price you’ll end up paying is more than meets the eye.

Usually, a buyer pays between 2 percent and 5 percent of the home purchase price in closing costs. Lenders often disclose these costs, but they aren’t the only hidden fees you need to consider.

Other fees to keep in mind include payments to appraisers, home inspectors and settlement agents, as well as the cost of title insurance, homeowners’ insurance and property taxes.

The Wall Street Journal cited a survey of U.S. homeowners conducted for TD Bank in March of 2016, which found that 62 percent spent close to $2,000 in unexpected costs during the home-buying process. For millennials, 44 percent incurred up to $5,000 in unexpected fees.

Other high-ticket unexpected expenses include the cost of setting up escrow accounts, membership fees for condos or homeowners associations, capital contributions to those entities and special assessments for emergency repairs.

While these fees might be noted in the sales contract, sometimes they are accidentally left out.

One way to keep fees down is to close on or just before the last day of the month, reducing your upfront payment of “prepaid interest.” Prepaid interest, which is due at closing, is a daily interest charge assessed between the closing and the day your first mortgage payment is due.

You can also have your real estate attorney get an estoppel letter for you. Such a letter lists any required fees and their due dates. Your attorney can help you review the letter as compared to the purchase contract to ensure the accuracy and fairness of fees.

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