The Costs of Closing

If you are a first time buyer, it’s important to know what costs you will need to cover. Aside from the actual price of the house, there are several additional charges that you will need to budget for. First, if you chose to have inspections done on the property, you will need to plan on this cost.  You will also have to decide how many inspections you plan to have done, if any at all.

If you plan to apply for financing, there are several fees that will come your way.  First, you will be billed for the application fee.  This charge may also include your credit check. The loan origination fee will cover the costs of the underwriting, funding and applying for the loan. This cost is a percentage of the loan, usually between 0.5% and 1.5%. The other cost associated with your loan will be the appraisal fee.  The appraisal needs to be done to insure that the value of the house is what you are offering.  If it appraises for lower than your offer, you may want to negotiate your offer.

Service by the title company will also be applied to your closing costs.  This amount will cover the title search of the property, notary fees, government filing fees, and other items.  During this search, the title company may find that the property needs a new survey.

If you are getting financing for the home, you are usually required a down payment of 20%.  If you deposit lower than the 20%, a Private Mortgage Insurance (PMI) fee will be applied to your payments.  This fee helps to protect the mortgage lender if you end up in foreclosure.

The last cost is the tax service fee.  This is a check to ensure that the taxes are paid for the property you wish to purchase.

I know, this seems like a lot of charges.  If you plan accordingly and stay within your means, you should be fine.

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