Buying a home is an exciting time. Keep the excitement alive by learning all you can about the home buying process. One of the most important topics to research is the cost. You may be aware that you could need a good faith deposit and a down payment, but what do you know about closing costs? The term closing costs can sound confusing because it’s vague and doesn’t necessarily give indications of what is included. Like your down payment, closing costs will come out-of-pocket.
When you seek a home mortgage loan from your lender, you’ll run into a number of costs associated with that transaction. The lender will check your credit report and ask a professional appraiser to give an appraisal on the home you’re buying. The home will undergo multiple inspections to make sure everything is as it should be with the property, house, and systems. Along with the inspections on the house and property, inspections may be ordered for termites and other pests. The land may be surveyed to make sure the property lines are correct.
Legal professionals will make sure the title is secure and can be transferred to you at the time of the sale. They will check to see that there are no past-due mortgage payments owed or liens held on the house. Each one of these steps, from appraisal to title search, includes a fee. These fees add up and are considered closing costs. As you can see, there is no single person that determines the amount of the closing costs. The fees are accumulated during the home buying process and are grouped together.
The bank or lender will give you an estimate of the closing costs. Read these carefully. Check for unnecessary or inflated costs. You have a right to decline the mortgage loan and go to another lender if the estimation doesn’t seem legitimate. Your real estate agent will help you figure out if everything is as it should be on the estimate.
Closing costs can vary depending on the area in which you live and what’s included, but you can expect to pay between two and five percent of the purchase price of the house. Once you make your offer on the house, your lender has several days to provide you with a good faith estimate of the closing costs. Keep in mind that this amount can change. The day before your closing date, the lender will provide you with an official document listing the actual closing costs.
A lender will not usually cover the costs of closing within the mortgage loan. These are paid by the buyer on closing day. However, some loans will put them in with the mortgage and charge interest on that amount. While this might save you from paying up front, you’ll pay more in the long run.
Often, a seller will offer to cover part of the closing costs. If so, this will be added to your contract. Keep in mind that being prepared to pay this cost yourself could make your offer more appealing should you enter into a bidding war with another buyer.
It’s a good idea to have enough money saved to cover the down payment, a good faith deposit, closing costs, and any other unexpected expenses that arise during the home buying process.
Call Central MD Homes today at 410-790-1345 to discuss selling your house or to tour available homes for sale.