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What do Closing Costs Include?
Closing costs often seem like the big question mark of buying a home. It’s a phrase that is used often, by banks, real estate agents and everyone else involved in the sale of a home, but many buyers don’t know exactly what they are, or what they include.
Closing costs are all of the fees, payments and other costs that need to be paid before a home is actually yours. They can add up quickly, so make sure you ask your lender for an estimate well before closing day. Some banks offer no-closing-cost loans, where the extra costs are added to your mortgage, usually with an extra fee or higher interest rate attached.
Closing costs may include:
- Home appraisal
- Attorney’s fees
- Title insurance
- First year insurance premiums (Private mortgage, Home Owner’s, and flood/earthquake, if applicable)
- Recording and transfer charges
- Survey
- Pest Inspection report
- Escrow account fee
- Origination Fee
When lenders receive your mortgage application, they have three days to send you a full list of possible fees and other disclosures (both federal and state). Before closing, they have to send you an itemized good faith estimate of your actual closing costs. Although this number can be slightly different from the final total cost, new requirements limit how many changes a lender can make, and how much those changes can add up to.
When you meet with your lender, ask about the closing cost fees you can expect to pay, and for an explanation of what each closing fee is and what it is used for. You might also want to ask how to fee amount is calculated. For example, the origination fee (used to cover the cost of evaluating, preparing and filing the loan paperwork) is usually a percentage of the total mortgage.
Closing costs can be confusing. Fortunately, both your Syracuse real estate agent and your lender can answer any questions you may have and can help make the final steps of buying your new home a breeze.
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