06 Jan All About Closing Costs
Closing is when ownership of your new home is officially transferred from the seller to you. Sometimes sellers will pay closing costs. If not, be prepared to pay an additional two to five percent of the home purchase price. These costs can be generalized into three categories.
1.The Costs of Borrowing Money: This includes “discount points”, a one-time charge to adjust the yield on the loan to what market conditions demand. Each point equals one percent of the mortgage amount; for example, two-and-one-half points on a $100,000 mortgage would cost $2,500.
2.The Costs of Establishing a Loan: These include the loan origination fee, appraisal fee and cost of credit reports. Premiums for hazard and mortgage insurance are usually paid at closing. Also, prepaid interest will be collected for the period between closing and the end of the purchase month.
3.The Cost of Document Preparation: Title insurance costs pay for the search of public records to determine if the property is free from any other ownership or liens. Recording and transfer fees cover the legal recording of the deed with governmental agencies as well as the transfer of taxes.
Overall closing costs vary from state to state. Contact us for an estimate of your closing costs.