December 29th, 2017 6:59 AM by Jackie A. Graves, President
IN THIS ARTICLE:
Closing costs are
fees associated with your home purchase that are paid at the closing of a real
estate transaction. Closing is the point
in time when the title of the property is transferred from the seller to the
buyer. Closing costs are incurred by either the buyer or seller.
costs vary widely based on where you live, the property you buy, and the type
of loan you choose. Here is a list of fees that may be included in
closing. The list is inclusive of fees you may see, but it’s not likely
that your loan will include all of the fees listed here.
home buyers will pay between about 2 to 5 percent of the purchase price of
their home in closing fees. So, if your home cost $150,000, you might pay
between $3,000 and $7,500 in closing costs. On average, buyers pay roughly
$3,700 in closing fees, according to a recent survey.
lender will give you a Loan Estimate for your loan, which will
include what the closing costs on your home will be, within three business
days of receiving your completed loan application. But these are just an
estimate, and many of the fees listed can change. If they do change, you
may receive a revised Loan Estimate so there are no surprises along the way.
many of the fees that make up closing costs are negotiable, and some are
completely unnecessary, especially things such as high administrative, mailing
or courier costs charged by your lender. Remember that you can shop around and
you may be able to find other lenders who are
willing to offer you a loan with lower fees at closing.
least three business days before your closing, the lender should give you
Closing Disclosure statement, which outlines closing fees. Compare this to
your Loan Estimate and ask the lender to explain what each line item on
your closing costs is and why it is needed. There are limitations on the amount
a number of fees can increase from the Loan Estimate to the Closing Disclosure
so there really shouldn’t be any surprises on closing day. But if there are,
you can still walk away at closing.
You can also avoid upfront fees
on your loan by getting a no-closing cost mortgage, in which you don’t pay any
of the closing costs when you close on the mortgage.
Typically, when a lender offers
a deal like this, it does end up costing you in the long run: The lender may
charge you a higher interest rate on the loan for not paying closing costs, or
the lender may wrap the closing fees into the total mortgage owed, in which
case you end up paying interest on the closing costs.
Finally, home buyers can
negotiate with the seller over who pays these fees. Sometimes the seller will
agree to assume the buyer’s closing fees.
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