Buying a home is an exciting endeavor. If it’s your first home, all the more so!
But with the excitement of buying your first home, there are also a lot of unknowns.
Perhaps, this is not your first time buying a home, but you felt unprepared last time and are hoping to go into this next purchase with more knowledge.
How mortgages and closing costs are broken down is often the most confusing part for home buyers of all kinds.
Golden Eagle Mortgage wants to remove some of that stress and help you feel prepared for your mortgage closing costs so you know how they are calculated and you know what to expect.
What Are Mortgage Closing Costs?
Having an understanding of what closing costs are will help you be prepared when you get to that point in your mortgage process.
Mortgage closing costs are a variety of fees that come along with the different expenses services that are necessary to complete a mortgage.
Regardless of your mortgage loan rates, and whether you are refinancing your home or buying a new home, you will need to pay closing costs.
Generally all closing costs are to be paid for by the home buyer, although there are a few that the sellers are expected to cover.
In some cases highly motivated sellers will offer to pay for all closing costs.
How Much Are Mortgage Closing Costs?
The average closing cost is between 2% and 5% of your loan amount.
However, you will need to check with your lender to be certain of how much your closing cost will be.
For a rough estimate, you can use a closing cost calculator such as this one shown on Smart Asset.
Try not to stress about your closing costs, but make sure you are aware of how much they will be in advance so you can be properly prepared.
Common Closing Cost Expenses
Below is a list of many of the possible closing expenditures.
They may vary greatly depending on your unique situation, but this gives a good picture into what factors can potentially make up the closing costs for both the buyer and the seller.
Buyers
- Application fee
- Assumption fee
- Attorney’s fee
- Appraisal fee
- Discount points
- Home inspection
- Title search fee
- Lenders title fee
- Property taxes
- Prepaid interest
- Mortgage insurance application fee
- Upfront mortgage insurance
- Upfront HOA fee
- Mortgage broker fee
- Origination fee
- Homeowners insurance
- Owner title insurance
- FHA, VA, USDA fees
Sellers
- Mortgage payoff and penalties
- Title insurance policy fees
- Outstanding property amounts
- Seller attorney fees
- Transfer of records and taxes
- Realtors commission
Negotiating
It may feel awkward to negotiate your fees, but if you can build up the courage you may end up with a much better deal.
“While you can’t avoid paying all the closing costs, there are some that can be negotiated, potentially saving you money…
Many fees are not set in stone and the lender has some latitude to adjust them, but you’ll need to ask about each one individually”
How To Best Prepare
The best way to prepare for closing costs is to be aware of them and factor them in when you’re budgeting for your home purchase.
Some people have a rude awakening when buying their first home because they did not consider the closing costs.
But as the weeks pass, thoughts about how this virus will affect other parts of our lives may come up.
Many Americans wonder how their finances will be affected, and if they had plans to buy a house they may question the timing.
While this virus undoubtedly impacts all of our lives greatly, there is some good news regarding mortgage interest rates for people in the market for a home.
As much uncertainty as there is during this time, the mortgage rates throughout America are still incredibly low, meaning now may still be the perfect time for you to take the leap and purchase a home.
Today we will discuss why you should still buy now, and how to do so safely during a pandemic.
