Closing Costs Explained!

So many times I’m asked what are the fee’s to buy a home… Even if you receive down payment assistance, you may still be responsible for all or part of the closing costs. Closing costs include all the expenses and fee’s associated with home selling or buying. 

In this post, I’ll attempt to breakdown closing costs for you!

You’ll be asked to fill out an application during the lending process. There may be a fee with it, that could cover things like, credit check, appraisal, though not all lenders charge a fee for this. Nevertheless, it would be part of the closing costs. 

 (Escrow protects both the buyer and the seller in a transaction by ensuring that both parties perform according to the provisions of the deal. Escrow fees are common costs associated with buying and selling homes.) One of the agents involved in the transaction will open the escrow. 

If your lender has an origination fee, it will be added into the closing costs. An Origination fee is a fee charged by a mortgage broker to process the loan.

Then there are Points, which are fees that allow you to buy down your intereste rate, giving you a lower monthly payment. Points are a percentage of your loan amount and you can decide to pay or not to pay these. Each lender offers different interest rates with different loans, but either way, this is part of closing. 

The cost for an Underwriter is included in the closing costs as well. An Underwriter is the individual that does the research to determine whether you are a good candidate for the loan. 

Other costs during closing include the appraisal, credit report, pest inspections, home inspections, title search, document preparation and more!

What you actually pay in closing costs will vary it depends on the purchse price of the home. Though most home buyers typically pay between 2% –  5% of the loan amount in closing costs. During your qualification process with your lender, you will receive an outline of all the closing costs and you will need to agree to them before closing the deal. 

Educating yourself and preparing is the key to a smooth home buying experience. Be sure to choose a knowledgeable Realtor and Lender to assist you with this process! 


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