When you obtain a mortgage, you need to pay fees - charged by lenders and third parties – related to the purchase of the home. These fees are called closing costs and are included on top of the cost of the home and down payment.
Here is a list of common closings costs:
Closing costs typically run about 2-4% of the purchase price. So, if you purchase a home for $300,000, closing costs will run between $6,000-$12,000.
Within 3 days of applying for a loan, lenders are required by law to give borrowers a Good Faith Estimate (GFE). The GFE will list all of your closing costs, but these may change by the time of closing. Legally, they are allowed to change by 10%, so it’s important you take that into account when budgeting your purchase.
Before you sign the papers on your home, you will receive a HUD form that lists all of the fees to be paid. If the closing costs are higher than you expected and can afford, you can walk away from the deal. But, be warned, you will likely lose money, especially your earnest money.
If you are concerned about paying extra out of pocket for the closing costs, there are mortgage programs that do not require you to pay them. In this case, the lender will either raise the interest rate or fold the costs into the total purchase price of the home. Make sure you discuss this with your mortgage consultant.
If you have any questions about closing costs, ask your Sea Coast agent or mortgage consultant. Don’t have an agent, find one today.