subject: Buying A Home What Are The Closing Costs? [print this page] Most of the time, the closing costs are the last thing a person thinks of when buying a home. Closing may be the joyous moment when the home becomes yours but the costs can be surprisingly aggravating.
When you purchase a home, condo or other property, you will go through a period known as escrow. Various issues that are related to the property transfer are worked out during escrow. You are going to be paying closing costs at the last day of escrow as this is known as the closing day.
Closing costs come in many forms. While others are relatively painless, some involve significant dollars. Below is a list of typical costs.
Escrow Fees
When it comes to an escrow agent, they are essentially a third party that works with the seller and buyer to finalize the transaction. The escrow agent will charge a fee for this assistance. It would depend on your area and the agent but you can expect fees from a few hundred dollars to around a thousand or so. You need to ensure that you find out the fees before you pick an escrow agent.
2. Home Loan
In the current market, obtaining a home loan is considered as a highly subjective event. "Points" can be a major cost associated with home loans. Points are essentially a fee you pay or have build into the loan for the privilege of being allowed to borrow money. Most of the time, a point equates to 1% of the loan. One point would be equal $3,000 on a loan of $300,000. You can shop for a loan that doesn't require you to pay points if you happen to have excellent credit.
c) Home and Title Insurance
Having insurance for your home and title is definitely a must. If you are borrowing money to purchase the home, each is mandatory. If you are using your own funds, you should still get both forms of insurance. This will also provide insurance against issues involving your home and problems with the title transferred to you as each name implies. You want to have clear title.
d) PMI
Private Mortgage Insurance, "PMI", is mandatory if your down payment is less than 20% of the purchase price. A few hundred dollars a year in PMI is what you can expect to pay. Inspections, miscellaneous fees, and appraisals are examples.
You are going to use a variety of services to validate the property is your dream home in the home purchase process. With these services, there will be fees and you can also expect to pay for home inspectors, appraisers and the like. Depending upon the state you live in, many of these fees may be built into your mortgage. Nonetheless, you need to know exactly what you must pay for on closing day so you can budget accordingly.
Closing escrow, particularly if it is for your first home, should be considered as one of the happier days in your life. Are you sure you know the costs associated with it so you don't have to spend the day running around borrowing money?
