In addition to your down payment, you are required to pay closing costs when buying a home. No one is exempt from these costs, and the majority of these costs are considered 3rd party fees (not necessarily related to your home loan). FYI – The word “closing” or “at closing” means escrow. You pay your closing costs and down payment “at closing” or at escrow, typically 1-3 days before your home loan closes (the day you get keys and the home is officially yours).
In this article and video, you will learn:
(1) What are closing costs
(2) How much are closing cost
(3) What fees make up your closing costs
(4) The 5 options you have in paying your closing costs
Understanding Your Closing Costs – Intro from Dan
What are closing costs?
Closing costs are a variety of fees associated with buying a home. These fees are in addition to your down payment and can often times vary depending on the type of loan program, rate preference (additional costs associated with buying down your rate), price of home, and length of rate lock. Closing costs are paid at closing with your down payment.
How Much Are Closing Costs & What Are the Fees?
Below I’ve outlined an example of typical closing costs for a purchase transaction. The total amount of your closing costs can vary, but a general rule of thumb is to estimate 2% of the sales price (please note: the fees w/ the red arrow are the 2 fees that the lender control):
The 5 Ways To Pay Your Closing Costs
As I shared in detail in the video above, there are 5 ways to pay for your closing costs:
(1) Pay your closing costs at closing in addition to your down payment
(the most common way borrowers pay their closing costs)
(2) Roll your closing costs into the purchase & finance them
(an option when cash is tight, home must appraise at higher amount)
(3) Lender credit to off-set closing costs
(comes in the form of a higher rate/see report in video)
(4) Ask the seller to pay your closing costs
(tougher to do in a hot seller’s market as we are currently in)
(5) Get a real estate broker credit
(seen w/ online discount brokerages – less service/advice comes w/ this)
How to Get Approved For A Home Loan With Dan Keller
We make it easy. I encourage you to reach out to me through email or phone to have a mortgage planning discussion surrounding your mortgage goals and budget. There are so many additional factors that go into qualifying for a Home Loan today, it’s important that you are working with a professional that understands the ins and outs of the process and current market trends.
To apply for a Home Loan, visit my Mortgage Concierge Page and follow steps one and two.
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