When you are shopping for your first home the prices can be mind boggling. Since it will probably be your first major purchase you may find it hard to wrap your head around the numbers. Unfortunately, the upfront cost of the house is not all you have to worry about. There are also Closing Costs to pay.
Closing costs refer to all of the little extra expenses tied in with buying a home. They are settlement costs that the purchaser needs to pay upon receipt of their loan from the lender. They typically cost between two to seven percent of the total loan value. Some of the costs are paid before the day of closing but the bulk of them are paid on the day of closing. Learn more about the timeline of a closing here.
Closing costs can normally be divided into 4 categories:
- Escrow account payments
- Closing costs paid in advance
- Closing costs to obtain a loan
- Miscellaneous closing costs
Standard closing costs will often be:
- Origination fees
- Discount points
- Lenders fees
- Credit report cost
- Title insurance fees
- Title search fees
- Flood certificates
- Notary fees
Other fees that fall under the miscellaneous category can include:
- Title insurance
- Courier fees
- Wire fees
- Mortgage and deed taxes
- Recording costs
Always read your real estate contract over carefully with a dedicated Peachtree City real estate attorney, because each state spells out what the closing costs are in great detail. Also keep in mind that the buyer is traditionally the one that pays the closing costs but you still have options:
- You can walk in with a cashier’s check on the day of closing and pay all costs
- You can negotiate with the seller to get them to pay part of or all the closing costs. If the property is hot and there are a lot of offers then you will probably lose with this tactic, but if the sellers are motivated they may pay closing costs just to get it over and done with.
- You can roll your closing costs into your mortgage to avoid the lump sum at closing but you will pay more per month.