Even first-time home buyers know that there are closing costs associated with buying a home. But they don't always know what the words "closing costs" actually mean, what they include, or why they have to pay them. When you're handing over that much money, however, it's important that you understand exactly why you're doing it.

What are closing costs?

Closing costs are the fees associated with buying a home that you pay at closing. Closing is when the sale of your home is closed, and the title to the home is transferred to the buyer from the seller.

What fees are included in closing costs?

There are many fees that can be included in closing costs. Such fees include:

  •         Application fee
  •         Appraisal
  •         Attorney fee
  •         Escrow or closing fees
  •         Courier fees
  •         Credit report
  •         Escrow deposit for mortgage insurance and property taxes
  •         Home inspection
  •         Homeowners association transfer fees
  •         Homeowners insurance
  •         Lender's Policy Title insurance
  •         Origination fee
  •         Pest inspection
  •         Recording fee
  •         Survey fee

There are other fees that could be included in this list, and not every fee on this list will be included in your closing costs.

How much do closing costs usually total?

Closing costs are usually about 2-5% of the total purchase price of your home. At least three days before closing, you'll get a Closing Disclosure statement from your lender. This document will outline all the fees included in your closing costs, including the amounts for each fee. You can compare this to the Loan Estimate that you should have been given after your loan application was completed, and if there are any discrepancies, you should ask the lender about them.

It's important to go over the Loan Estimate and the Closing Disclosure statement to make sure that everything matches up. If it doesn't, or if there are any changes on closing day, you don't have to go through with the deal. You can also try to negotiate with your lender to get rid of some of the fees. You must do this before closing, however.

Can you buy a house without paying closing costs?

There are no-closing cost mortgages. However, if you take this option, you may find that you pay a higher interest rate, or that the closing costs get folded into the loan, which means you'll be paying interest on the closing costs - costing you even more money in the long run.

Sometimes, a seller will agree to pay part or all of the closing costs, if the buyer is willing to negotiate with them.

Closing costs are a standard part of buying a home. Don't be surprised, go over all the documents carefully, and when closing day arrives, be prepared. It's the final step in getting you into the home of your dreams.

Posted by Website Programmer on
Email Send a link to post via Email

Leave A Comment

e.g. yourwebsitename.com
Please note that your email address is kept private upon posting.