Home Closing Costs On Home Purchase

Home Closing Costs On Property Purchase And Refinance Mortgage Loans:

Once you have decided that you want to become a homeowner, there are a lot of things and factors to consider. Most folks do not buy homes often and many home buyers just buy a home and live in the home they purchase most of their lives where they raise they children and family. Buying a home is not like buying any other high ticket merchandise. A home is many people’s single largest investment and the home buying process is not easy, especially when it comes to obtaining a home loan. Home buyers need to understand that the down payment on home purchase is the not only costs they will incur for a home purchase. All home purchase and home refinance transactions have home closing costs, which are costs and fees that a mortgage loan borrower will incur with buying and/or refinancing a home. Examples of some home closing costs includes origination fees, credit reporting fees, title charges, attorneys fees, appraisal fees, home inspection fees, and pre-paids ( escrows required and mandated by the mortgage lender ). Home buyers and homeowners who are planning on refinancing their current home mortgage need to also prepare for home closing costs which can add up. Home closing costs are not like a down payment on a home purchase which is a fixed percentage amount. Home closing costs vary upon where you are buying your home, each county and state have different costs when it comes to transfer stamps, recording fees, and other third party fees and cost.

What Are Home Closing Costs?

Home closing costs are costs and fees a home buyer and/or homeowner who is refinancing their home mortgage needs to pay when closing on their home loan. Closing costs are fees and costs that is charged by the mortgage lender and third party vendors such as title companies, attorneys, home appraisers, home inspectors. The home closing is when the title to the property is transferred on to the home buyer from the home seller and either the home buyer and/or the home seller is responsible to paying the home closing costs. On every closing, there are closing costs that the home buyers are responsible for and costs that the home seller is responsible for. The home buyer needs to come up with the down payment as well as the closing costs at the closing table.

Fees And Costs That Is Included In Home Closing Costs

It is very simple to calculate the down payment on a home purchase because mortgage loan program require minimum down payment requirements on home purchase . For example, minimum down payment requirements on FHA Loans is 3.5% down payment. On a $100,000 home purchase, it is easy to calculate the 3.5% down payment on the home purchase, which is $3,500. However, it is harder to determine closing costs on a home purchase because closing costs are based on where the property you are buying is located and the type of property you are buying. Every county and state has different charges on closing costs such as transfer stamps, recording fees, and other fees and costs. Examples of home closing costs include but are not limited to origination charges, credit reporting fees,processing fees, underwriting fees,  home inspection fees, home appraisal costs, survey fees, title insurance fees, title search charges, homeowners insurance ( homeowners insurance needs to be paid upfront for the one year ), attorneys and legal fees, well inspection costs, pest inspection fees, escrow deposit hold back, and other fees and cost that may apply to the home buyer.

How Much Are Home Closing Costs?

As mentioned in the previous paragraph, it is hard to determine what your exact closing costs will be until further down the mortgage approval process . Most mortgage loan originators can estimate your approximate closing costs but cannot get you the exact amount until the mortgage loan processor gets all of the numbers from the title company. In general, home buyers can estimate their closing costs to be anywhere between 3% to 5% of the home purchase amount. On a $100,000 home purchase, closing costs can range between $2,000 to $5,000. Your mortgage lender will issue a Loan Estimate Form  . The Loan Estimate is the mortgage disclosure that replaced the Good Faith Estimate on October 3rd, 2015. By law, your mortgage lender needs to disclose the list of fees and costs that you may incur during the mortgage loan application and mortgage loan approval process. The closing costs listed on the Loan Estimate Form is often overly disclosed so the figures of the closing costs will not be accurate. Mortgage lenders are allowed to overly disclose but not under disclose on The Loan Estimate Form.

What If I Do Not Have Funds To Cover Home Closing Costs?

There are many qualified home buyers who are making a descent income, have the down payment for their home purchase, can afford the monthly proposed housing expenses, but do not have the home closing costs. Situations like these are very common where a home buyer is currently paying $1,500 per month in rent and their new proposed housing payment including property taxes and homeowners insurance will be $1,500 and have the down payment but do not have the extra funds to come up with the closing costs on their new home purchase. Solution to this problem is that home closing costs can be covered by the home seller with a sellers concession toward home buyers closing costs where the home sellers will cover most or all of the closing costs for the home buyer. How this concept works is lets say a home seller wants a bottom line price of $100,000 for their home. The home seller can inflate the purchase price to $106,000 and both the home buyer and home seller can agree with the $106,000 purchase price and the home seller can give the home buyer a $6,000 sellers concession towards the home buyers closing costs. Home buyers can cover all of their closing costs with a sellers concession but cannot use the sellers concessions towards their down payment. Another way of covering closing costs is through Lenders Credit Towards Buyers Closing Costs . How this works is where a mortgage lender will cover part or most of the home buyers closing costs in lieu of higher mortgage rate.

If you are a home buyer and need to get pre-approved and are looking for a mortgage lender with no mortgage lender overlays , please contact Gustan Cho Associates at 1-262-716-8151 or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays to take your calls and answer any questions you may have.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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