When buying your first home, there are costs you may not think about when you begin the process. A good faith deposit may be required, and that is expected to come out of pocket. You’ll also need the down payment for the house. This is around 20 percent of the home’s cost. Closing costs come out of pocket and can vary when it comes to amount required. For this reason, the term closing costs can be a bit confusing. To help erase some of the stress you may experience, here are some things to consider when preparing for these costs.
You’ll need to see a mortgage lender to secure a loan for the purchase of the house. The lender will check your credit score and request an appraisal to determine the correct value of the house. Several inspections will take place to cover everything from insects to roof condition. This is for your protection and is done to make sure everything is in good order. The land may be surveyed to ensure the property lines are correct.
On top of those fees, you’ll have attorney fees for title consultations, clerk fees for various tasks, and other professional costs as things progress. These fees are added together and the term closing costs is attached. It’s important to keep in mind that no single person determines these fees, and it’s difficult to get an accurate estimate in the beginning.
Be sure to check the lender’s estimate closing to make sure there are no inflated fees for couriers and other things that are not necessary. Remember that you have a right to accept or decline any loan offered. You may find it in your best interest to seek the advice of your real estate agent to better understand this part of the process. They can help you determine which fees are needed.
Closing costs are estimated to be between two and eight percent of the property’s purchase price. Once an offer is made on the house, the lender has several days to provide you with a good faith estimate of the closing costs. This estimate is subject to change, but it will give you a ballpark idea of what to expect. Actual closing costs may be different, so be prepared. The day before closing, you should get an accurate list of the closing costs.
Though rare, there are times when a lender will include the closing costs in the total mortgage loan. The down side of this is that you’ll end up paying interest on this amount. It’s better if you can pay the costs out of pocket.
The seller may decide to cover a portion of the closing costs. If this is part of the negotiations, it will be included in the contract. Being willing to cover this cost may benefit you in the event of a bidding war where multiple offers are being considered.
The good faith deposit, down payment, and closing costs could be substantial. For this reason, you’ll want to make sure you’ve saved enough money to cover the combined costs. Plan ahead and gather knowledge about the home buying process before you begin searching for a house. As always, seek the advice of a real estate professional to help you during the home buying process.
Call Rene Burchell today at 469-877-3303 to tour available homes for sale in the area.