Ever Wonder What You As A Buyer Have To Pay In Closing Costs?

monkey questionAs most are aware, a closing is when all the documents required to purchase a property and the agreements between seller and buyer are brought together, signed and finalized. You will also receive a HUD-1 statement listing all the various costs involved as well as any mortgage agreements if you are using conventional financing.

So how much do you owe in closing costs and what can you expect to pay? Well as a buyer you expect to pay around two to 5 percent of the purchase price in closing costs. Some of those costs are listed for you below:

Title Search: As a buyer you want to insure there are no hidden issues with obtaining a clear title. The title company will do this for you and insure the title which that fee is sometime included in this cost

A Loan Application Fee: If you are using conventional financing a mortgage company has to determine your credit worthiness so they charge this fee to run your credit report

Initial Interest: You will pay all following months through the mortgage but the first months is not covered so you will pay that here at closing

Private Mortgage Insurance (PMI): Lets’ face it, a mortgage is a huge debt that spans most of your life so mortgage companies use this to protect themselves in the event you default on the loan unless you can come up with about 20 percent down

Loan Origination Fee: This little guy is typically one percent of the loan and is charged by mortgage companies to start the loan

Appraisal Fee: Basically this is an assessment of the properties true price. I don’t use value because value is subjective to the person doing the evaluating and what is valuable to one person may not be to another

Survey: You’ll need this to determine where your property starts and ends as well as to identify improvements and buildings on the property

Property Taxes: Most mortgage companies create an escrow account and ensure all property taxes are paid. After all, they wouldn’t want a nasty tax lien on the property if they ever had to foreclose on you

Homeowners Insurance: Just like care insurance you must have this in order for a mortgage company to finance the home and you may also be required to pick up some flood insurance depending on where the property is located

Discount Points: Want to get a lower interest rate? Paying points is a way of doing just that and they typically range between one and three percent of the loan

Government Fees: Uncle Sam needs his money and this is how he gets it. Taxes and Fees are charged on the sale of the property, the transfer of, and the recording of the deed. This amount will vary based on your area

So there you have it in a nut shell some of the most common costs associated with purchasing real estate the conventional way. We here at Harmonious Homes have a few other ways of purchasing real estate and if you are in the market to buy a home just contact us to find out some of the options that may be available to you.

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