Closing Costs Explained
Closing costs explained – like buying a home is no easy task. Before you begin the process of buying a home it is important to understand closing costs so that you are not caught by surprise by the additional fee. Closing costs are the miscellaneous administrative fees incurred when purchasing a house. Closing costs are typically 2-5% of the purchase price, though it is not uncommon for the final numbers to be outside of that range. The fees that factor into closing costs include but not limited to loan origination fees, a fee for running your credit report, attorney fee, title searches fee, title insurance fee, and an appraisal fee. The list could go on and on but the inclusion of items on the list depends on where you live and the kind of property you buy.
Good Faith Estimate
Within three days of your loan application, your lender is required to provide you with a good faith estimate. The documents you will receive estimate the fees that compose the closing costs of your loan. Keep in mind, it is just an estimate and not the final tally, so the numbers may change. When you get your final closing costs from the lender see if the numbers are different from the estimate. Be sure to ask why the costs changed as some of the numbers are negotiable and you may be able to save money.