Budgeting for closing costs becomes necessary after purchasing a home. These expenses and fees are part of securing a home loan and are commonly referred to as mortgage closing costs. It’s important to note that closing costs go beyond the down payment. That is typically ranging from three to five percent of the loan amount. Hence, continue reading to find out if you’re curious about what the home loan closing costs and there inclusions.
Closing Costs
Here is a detailed review of the main closing costs:
Get your copy of the First-time Home Buyer Guide for FREE. Click here.
Loan Origination Fee
The loan origination fee covers loan processing and underwriting. It typically amounts to around 0.5 percent of the loan and is paid at closing.
Home Appraisal and Survey Fees
Another cost to consider is the home appraisal and survey fees. Definitely, you can expect to pay several hundred dollars to confirm the home’s current market value while prices may vary for this service.
Private Mortgage Insurance
You may have to pay private mortgage insurance (PMI) to protect the lender against potential losses. That is, if your down payment on a conventional loan is less than 20%. Furthermore, this cost is incurred at closing and can add up over time.
Mortgage Points
This is paid to the lender directly at the closing time. In particular, it is in exchange for a low mortgage interest rate. Mortgage points are also called discount points.
Property Tax
Property tax is yet another cost that you will incur at closing. Most often, home buyers have to pay six months of advance tax. Moreover, it is important to understand that taxes are variable by location. Also, the property is reassessed which could increase the real estate tax too once the loan closes.
Escrow Fee
You will have to pay the escrow fee to the agent who helps you close. The fee is variable. But, it will generally cost you around 1 or 2 percent of the sale price.
Contact us today For more information about closing costs. Our experts can provide you with complete details and quality guidance.