Saturday, June 25, 2011

What Are Closing Costs (When Buying A Home)? What Costs Are Included?

Getting pre-qualified and being approved for a mortgage are only part of the financial responsibility of buying a home.  As a buyer you should know and expect what to pay at closing - called closing costs.
Here is a list of common closing costs that you are almost guaranteed to see every time:
1. Down Payment: This ranges from 0 down 100% financing, to anywhere from 3.5% down upwards of 20+%. This is up to you and the loan program you choose and/or are approved for.
2. Credit Report: The first step in qualifying for a mortgage is checking your credit. You generally must pay to view your credit score, and this usually costs around $7 - $20 (per person).  The lender that I work with, David DuBeau does not charge this upfront fee.
3. Home inspection: Costing around $300 - $500, a home inspection is always recommended but not always required. Even new homes (as we teach in our home buying classes) can have faults from horrible work. Your contract can leave you an out if something is wrong as well. 
4. Loan Origination and Points: You can pay points in order to get a lower interest rate, but you do not have to and your loan officer should not charge them unless it is talked over with you first. Please see my other blog about this. An origination fee is the cost of doing business with the lender doing your loan. David DuBeau is very good at making sure you do not get overcharged.
5. Appraisal: An appraisal costs around $400 - $500 depending on the type of loan and property. This is usually the only fee collected from the lender up front and usually a credit card or check is collected to hold. If the closing costs are being paid for by the seller, then the card/check will not be charged/cashed upfront, or at all when the seller pays.
6. Title Insurance and other 3rd party fees: There are other charges that vary based on the purchase price and loan amount like title insurance, government, and notary fees etc. Your lender will always provide a good faith estimate of your expected settlement costs. There are other costs associated with closings to be sure but the good faith estimate will cover them for you.

7. Property taxes:  Some lenders require that the property taxes be collected on a monthly basis (impounded).  The lender will then make the property tax payment to insur that it is kept current.  Therefore, several months (usually 6 months) worth of impounds are collected at the time of escrow closing.
In this "buyers market" it is very easy to get the seller to pay for your closing costs, so keep that in mind!  This is why you should have the BEST REAL ESTATE AGENT AND LOAN OFFICER working for you.
Getting prequalified for a home loan is quick, free, and easy.  I always recommend to call THE BEST LOAN OFFICER IN MEDFORD, OREGON:  David DuBeau 541-292-9663 at Sterling Savings Bank.  He has many different loan programs available including 100% financing.   
CHERYL MALONE  - Real Estate Broker
Windermere Investors Marketplace

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