There are many potential homebuyers, and even sellers, who believe that you need at least a 20% down payment in order to buy a home, or move on to their next home. Time after time, we have dispelled this myth by showing that there are many loan programs that allow you to put down as little as 3% (or 0% with a VA loan).
If you have saved up your down payment and are ready to start your home search, one other piece of the puzzle is to make sure that you have saved enough for your closing costs.
“Closing costs, also called settlement fees, will need to be paid when you obtain a mortgage. These are fees charged by people representing your purchase, including your lender, real estate agent, and other third parties involved in the transaction.Closing costs are typically between 2 and 5% of your purchase price.”
We’ve recently heard from many first-time homebuyers that they wished that someone had let them know that closing costs could be so high. If you think about it, with a low down payment program, your closing costs could equal the amount that you saved for your down payment.
Here is a list of just some of the fees/costs that may be included in your closing costs, depending on where the home you wish to purchase is located:
Government recording costs
Credit report fees
Lender origination fees
Title services (insurance, search fees)
Tax service fees
Is there any way to avoid paying closing costs?
Work with your lender and real estate agent to see if there are any ways to decrease or defer your closing costs. There are no-closing mortgagesavailable, but they end up costing you more in the end with a higher interest rate, or by wrapping the closing costs into the total cost of the mortgage (meaning you’ll end up paying interest on your closing costs).
Home buyers can also negotiate with the seller over who pays these fees. Sometimes the seller will agree to assume the buyer’s closing fees in order to get the deal finalized.
Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.
Author:Chad House Phone: 571-306-0353 Dated: October 5th 2016 Views: 752 About Chad: ...
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"Melody was an amazing realtor and we definitely recommend her for finding your dream home. We were first time home buyers and she was instrumental in all phases of the home-buying process, from start to finish. We had attended open houses for about six months before getting serious about buying. We met her several months earlier and she was on our short list of agents to interview, and we chose her because she was extremely personable and knowledgeable about our target search area. She provided suggestions for us based on our wants/needs. We were pretty picky about what we were looking for, and through the months, she showed us a couple dozen homes. When we found our dream home, she made the purchase process seamless, including helping us draft the contract, explaining the terms and documents, highlighting the tight timelines, providing contacts for our consideration to conduct inspections/other services, and walking with us every step of the way. Above all, and the reason Melody is an excellent realtor, is that she is super organized. This trait helped ensure our home-buying experience was a success. We will use her again some time in the future."