How Much Is Too Much For Mortgage Closing Costs

How Much Is Too Much For Mortgage Closing Costs

How Much is​ too Much for Mortgage Closing Costs?
Something that is​ very important for you​ to​ take into consideration when purchasing or​ refinancing your home is​ the​ closing costs.
I would love to​ tell you​ that closing costs are not expensive,​ but believe me they are .​
Once you​ add up all the​ fees’ involved,​ such as​ points,​ taxes,​ title insurance,​ county costs and various other fee’s,​ it​ really begins to​ add up.
The first thing you​ need to​ understand is​ that nobody works for free,​ so be prepared to​ pay at​ closing.
The total amount of​ fees’ depends on​ quite a​ few things .​
For instance,​ the​ percentage of​ loan origination fees’ (points) the​ lender is​ going to​ be charging you​ .​
Another large fee is​ the​ title search and insurance .​
The title fee varies by state and is​ determined by the​ amount of​ the​ home.
Closing costs on​ average should not exceed 5% of​ the​ total amount of​ the​ purchase price,​ and this does not include the​ down payment.
The total amount of​ these fees’ does not all go to​ the​ lender .​
Generally only the​ loan origination fee and the​ application fee go to​ the​ lender.
The rest of​ the​ fee’s such as​ the​ appraisal,​ credit report,​ interest for the​ period in​ between closing and your first monthly payment,​ home owner’s insurance,​ title insurance,​ pro rated property tax,​ etc.,​ go to​ their appropriate institutions.
Before you​ go to​ closing,​ the​ lender is​ required by law to​ send you​ a​ Good Faith Estimate (GFE).The GFE discloses an​ accurate estimate of​ all the​ fee’s you​ will be responsible for at​ closing.
Make sure you​ go over the​ GFE with a​ fine tooth comb,​ and if​ there are any fees’ you​ don’t understand,​ call your lender or​ broker and ask for an​ explanation.
As I​ stated earlier,​ you​ must be prepared to​ pay closing costs .​
Closing costs are not cheap,​ but you​ should not pay a​ penny more than what is​ required.
If your closing costs are somewhere between two and 5% of​ the​ amount of​ the​ mortgage,​ you​ should be in​ good shape.
If they are drastically higher,​ consider finding another lender.
Remember,​ do your homework .​
Put yourself in​ a​ position to​ understand all the​ jargon that fills up all the​ paperwork you​ will be signing.
Also,​ take your time and shop around,​ always look for the​ best rate at​ the​ lowest possible price.

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