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.
More Information:Visit
http://www.fsboamerica.org/ for more details.
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