Closing Costs When Buying A Home

Closing Costs When Buying A Home



Closing Costs When Buying a​ Home
Closing costs are often the last thing a​ person thinks of​ when buying a​ home .​
While closing is​ the joyous moment the home becomes yours, the costs can be surprisingly aggravating.
When you purchase a​ home, condo or​ other property, you will go through a​ period known as​ escrow .​
During escrow, various issues related to​ the property transfer are worked out .​
The last day of​ escrow is​ known as​ the closing day and you are going to​ be paying closing costs.
Closing costs come in​ many forms .​
Some involve significant dollars while others are relatively painless .​
Here’s a​ list of​ typical costs:
Escrow Fees
An escrow agent is​ essentially a​ third party that works with the seller and buyer to​ finalize the transaction .​
For this assistance, the escrow agent will charge a​ fee .​
Depending on your area and the agent, you can expect fees from a​ few hundred dollars to​ around a​ thousand or​ so .​
Make sure you find out the fees before picking an​ escrow agent.
Home Loan
Obtaining a​ home loan in​ the current market is​ 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 .​
a​ point usually equates to​ 1% of​ the loan .​
On a​ loan of​ $300,000, one point would equal $3,000 .​
If you have excellent credit, you can shop for a​ loan that doesn’t require you to​ pay points.
Home and Title Insurance
Insurance for your home and title are 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 .​
As each name implies, they provide insurance against issues involving your home and problems with the title transferred to​ you .​
You want to​ have clear title.
PMI
Private Mortgage Insurance, PMI, is​ mandatory if​ your down payment is​ less than 20% of​ the purchase price .​
You can expect to​ pay a​ few hundred dollars a​ year in​ PMI .​
Inspections, Appraisals and Miscellaneous Fees
In the home purchase process, you are going to​ use a​ variety of​ services to​ validate the property is​ your dream home .​
These services come with fees and you can 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 should be one of​ the happier days in​ your life, particularly if​ it​ is​ for your first home .​
Make sure you know the costs associated with it​ so you don’t have to​ spend the day running around borrowing money.




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