Learn About The Closing Costs When Buying A Home

by Amy Norman on February 3, 2012

Often the last thing a person thinks of when buying a home are the closing costs. While closing is the joyous moment the home becomes yours, the costs can be surprisingly aggravating.

When you purchase a home, condo or other property, you will go through a period known as escrow. During escrow, there are various issues which are related to the property transfer that are worked out. The closing day refers to the last day of escrow and you are going to be paying closing costs.

Closing costs come in many forms. While others are relatively painless, some involve significant dollars. Keep reading to learn the typical costs.

1. Escrow Fees

Essentially a third party that works with the seller and buyer to finalize the transaction is an escrow agent. For this assistance, the escrow agent will charge a fee. Depending on your area and the agent, you can expect fees from a few hundred dollars to around a thousand or so. Before you pick an escrow agent, you need to make sure that you find out the fees first.

b) Home Loan

Obtaining a home loan in the current market is a highly subjective event. “Points” can be a major cost associated with home loans. Essentially, points are a fee you pay or have build into the loan for the privilege of being allowed to borrow money. Most of the time, a point equates to 1% of the loan. If the loan is $300,000, then one point would equal $3,000. Having excellent credit would mean that you can shop for a loan that doesn’t require you to pay points.

3. Home and Title Insurance

It is a must to have insurance for your home and title. If you are borrowing money to purchase the home, each is mandatory. If you are using your own funds, you should still get both forms of insurance. This will also provide insurance against issues involving your home and problems with the title transferred to you as each name implies. You want to have clear title.

d) PMI

If your down payment is less than 20% of the purchase price, then PMI or Private Mortgage Insurance is mandatory. A few hundred dollars a year in PMI is what you can expect to pay. Inspections, Appraisals and Miscellaneous Fees

What you are going to use in the home purchase process is a variety of services to validate the property is your dream home. You can expect to pay for home inspectors, appraisers, and the like since these services come with fees. It would depend upon the state you live in but a lot of these fees may be built into your mortgage. Nonetheless, you need to know exactly what you must pay for on closing day so you can budget accordingly.

Closing escrow should be one of the happier days in your life, particularly if it is for your first home. Are you sure you know the costs associated with it so you don’t have to spend the day running around borrowing money?

Let us show you the best Mexico real estate for sale and guide you through the process of buying property.

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