A Home Buyer's Guide to Closing Costs

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A Home Buyer's Guide to Closing Costs

• It's a very precious event when someone buys a
  house. But there's a budget, planning, and
  guidance required to purchase a home properly.
  While purchasing a home, surely you've heard
  about closing costs but don't know exactly? These
  costs stay a mystery for the buyers until the
  end, and there is a high possibility that they
  can be forgotten amidst everything. That's why,
  In this article, we've covered everything about
  closing costs, charges for different areas, and
  all the necessary details you need to know that
  help you to buy a home.
• Without any further delay, Let's begin!
• What do you understand about closing costs?
• Many other fees are associated with a house
  purchase, excluding the down payment costs and
  obvious mortgage. Closing agreements are the
  final step before you get the keys to your house
  in your hand. These are known as processing fees
  paid to the lender in exchange for the loan set
  by the lender. These costs come into effect upon
  the closure of the loan. These cover various
  fees, including home inspection fees, appraisal,
  and many more. They are classified based on
  their nature into two categories one is
  described as the recurring costs, while the
  other hand non-recurring ones.
• What do we understand from the term Non-Recurring
  costs?
• The charges are associated with loan request
  closure and with the processing.
• What do we understand from the term Recurring
  costs?
• On the contrary, the recurring ones are the ones
  that always appear with the ownership of your
  home, like Property taxes and Homeowners
  ownership.
• Things to remember during the payment of closing
  costs
• One needs to be cautious with preparing to pay
  the closing costs and read the paperwork
  carefully for the same too.

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• When you give the application for the loan of
  your house, a booklet explaining the closing
  cost estimation and the requirement of all the
  documents needed to submit is required to be
  given by the lender.
• Closing costs are incurred through gifts of
  equity too.
• Who has to pay the closing cost?
• One gets the idea of buyers paying the closing
  cost, but in reality, both the seller and buyer
  are responsible for paying off the charges.
  Although these fees have space for negotiation, a
  portion of these fees is paid by a seller in a
  few cases, called seller concessions. These
  concessions can be extremely helpful, especially
  during the closure. However, the amount paid by
  the seller has its limitations too. Below are
  the simplification loans for your convenience.

• 1. Conventional loans (for primary residences and
  second homes down payment respectively)
• Down payment for primary residences
• 25 or more 9
• 10-24.99 6

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• less than 10 3
• Down payment for second homes
• 25 or more 9
• 10-24.99 6
• FHA Loans
• Based on lesser the purchase price and appraised
  value, the contribution limit is 6
• VA Loans
• Towards the required VA funding fee and escrow
  account, up to 4 of the appraised value and
  purchase value can go.
• What is the amount of closing cost?
• The expectations from a buyer for the payment of
  closing costs is somewhere between 2 and 5, on
  average. According to the law, a loan estimation
  needs to be informed by the lenders regarding
  the application of mortgage to the borrowers
  within three days to the buyer.
• These estimates are expected to lay down the
  estimation considered for interest rate,
  expectations regarding closing costs, and payment
  that needs to be fulfilled monthly. The
  presented estimations should come down very close
  to the final charges that will sum up during the
  closing, even though they are considered subject
  to vary.

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• Property Appraisal Fee
• On average, this cost goes up to 300 to 400 and
  covers the appraisal cost, appraised by a
  professional home appraiser and inspected by your
  lender about the authenticity.
• Escrow Fees
• This fee, on average, varies and is paid to the
  real estate attorney or escrow company and title
  company as an independent third party to close
  the transaction.
• Flood Certification
• This cost averages 15 to 20 and is required if
  your choice of home is placed near a flood zone
  or a floodplain. For this, certification is given
  from the Federal Emergency Management Agency
  (FEMA), and documentation done by your lender is
  required.
• Recording Fee
• The average cost varies and is a fee charged by
  the county recording office or your local city
  for recording the sale or purchase of a home.
• Property taxes
• They normally vary on average, and the buyer
  holds the responsibility of paying them for two
  months during the closing.

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• Assumption fee
• These fees go up to 1 of the loan balance
  generally on an average and take over the balance
  remaining from the seller's loan.
• Discount Points
• This amount is paid additionally and is advised
  only to pay if the buyer plans to stay in the
  home over a longer period. They are paid to
  reduce the loan's interest rate and are delivered
  to the lender.
• Insurance-related Costs
• Mortgage Insurance Application Fee
• This fee varies according to the lender and
  covers the application cost related to PMI
  insurance. This fee is required if the buyer
  cannot put down 20 on the house as it gives
  insurance to the lender if the buyer ends up
  defaulting on the loan.
• Upfront Mortgage insurance
• This fee varies over your purchase price of
  mortgage insurance from 0.55 to 2.25, which is
  considered a lump-sum payment that covers the
  loan's life or the premium of mortgage
  insurance. If the buyer holds PMI, they are
  likely to complete the first month's premium
  payment during the closing.
• Homeowner's Insurance

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