What Are Closing Costs On Home Purchase?
Home buyers will incur two types of funding requirement on a home purchase. A down payment and closing costs on home purchase. With the exception of VA loans and USDA loans, down payments on home purchase are required on FHA loans, Conventional Loans, and portfolio loans. All home purchase transactions require closing costs on home purchase. Closing costs on home purchase are any fees and costs that is associated with the origination of the mortgage loan and costs associated with the home purchase such as third party charges . Closing costs on home purchase includes third party costs such as attorneys fees, appraisal fees, home inspection fees, title charges, pre-paids, and any other fees and charges that is associated with the closing of a home purchase.
Examples Of Types Of Closing Costs On Home Purchase
Down payment requirements are fixed depending on the mortgage loan program. For example, FHA requires minimum 3.5% down payment on a home purchase. Conventional loan programs require a 3% minimum down payment on a home purchase. Jumbo mortgage lenders normally require 20% down payment on a home purchase. VA loans and USDA loans do not require any down payments. However, closing costs is not a fixed rate and closing costs very on every real estate transaction and is different in every state, county, city. Normally, closing costs on home purchase average 2% to 3% of the home purchase price.
Here are some examples of the types of closing costs on home purchase a home buyer can be charged on a real estate purchase transaction by the mortgage lender and third party vendors:
• Costs and/or fee to run your credit report
• A mortgage loan origination fee, processing fees, and underwriting fees
• Title search fees
• Title insurance costs and/or fee
• Appraisal fee which is normally paid outside closing
• Home inspection fees which can include termite inspection, well inspection, as well as other specialty inspection.
• Attorney fees
• City and state transfer tax fees, intangible tax fees, and recording fees
How Much Are Closing Costs On Home Purchase?
As mentioned earlier, closing costs can vary depending where the property is. Normally, closing costs on home purchase are between 2% to 3% and sometimes much more depending on the city, county, state the property is as well as the type of property. Tentative closing costs will be disclosed on the initial Good Faith Estimate but often times than not, the disclosures on the Good Faith Estimate is over disclosed. You will get a more accurate figure on your closing costs more towards when you reach closer to the closing date when you get exact figures for all of your estimates such as homeowners insurance and other third party charges. Your closing costs will be listed on your HUD -1 Settlement Statement.
Most home buyers do not have to worry about closing costs as long as you can get a sellers concession. Sellers concessions are when a home seller with credit a home buyers closing costs. FHA allows a home buyer to get up to a 6% sellers concessions. Fannie Mae and Freddie Mac allows a home buyer to get up to a 3% sellers concession for owner occupant homes and second homes and up to a 2% sellers concession on an investment property.
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