| Buyer Closing Costs: Everything You Need To Know |
| Written by Kathleen Chiras |
| Sunday, 25 July 2010 07:53 |
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A term many people are not familiar with until they start to think about buying a home is "closing costs." Closing costs are essentially more money that you have to scrounge up in order to buy a home, on top of the down payment. This term will come up when you are looking for a loan or making an offer on a home. There are several decisions you can make regarding how you pay your closing costs, and when you pay.
A term many people are not familiar with until they start to think about buying a home is "closing costs." Closing costs are essentially more money that you have to scrounge up in order to buy a home, on top of the down payment. This term will come up when you are looking for a loan or making an offer on a home. There are several decisions you can make regarding how you pay your closing costs, and when you pay. Buyer closing costs include numerous items There are many different fees and charges that make up buyer closing costs. The fees will all be listed on your Buyers/Borrowers Closing Statement. You can ask any remaining questions during closing. The closing meeting can be confusing because there are so many documents to sign and discuss. Many people go through them line by line with their buyer's agent before the meeting. Here's what to look for: Fees for the Appraisal Costs Associated with the Credit Report Loan Interest Home Owner's insurance (1 year up front) Property Taxes (1 year up front) Closing Fee to Title Company Title Charges (owner and lenders policy) Water Transfer Fees Your exclusive buyer's agent will be able to give you an estimate of the closing costs before you make an offer. That way, you can budget appropriately. Most of these fees and charges cannot be reduced. However, you can shop around for home insurance. This can make a big difference in you closing costs. When are buyer closing costs paid? They are paid at the closing. They will be included as a lump sum along with your down payment, which is typically paid with a cashier's check or by wiring the funds. There are various ways to pay your closing costs. You can pay your own closing costs. Or, the seller to pay them. You will make this decision when you make an offer on a home. If you ask the seller to pay closing costs it generally increases the sale price of the home by the same amount. For example, you could offer $220,000 on a home and pay your own closing costs of approximately $5,000. Or, you can offer $225,000 on the same home, and ask the seller to pay your closing costs. What are the pros and cons of each option? A big positive is that you will not have to have the cash for these fees at your closing meeting. A negative is that you will be paying interest on your closing costs. Buyer Pays: The up side to this option is that if you pay the closing costs yourself in "cash", you will not pay interest on closing costs. The down side is, you will need to budget for these costs along with costs to move, any repairs that need to be made to the home before moving in, and down payment. You may wish to discuss the ins and outs of your situation with your agent to decide the best course of action. In the end, many people decide to look for homes in a price range that allows them to pay their own closing costs. About the Author: Learn more about buyer closing costs. Stop by Kathleen Chiras's site where you can find out all about how a buyer's agent can help you with closing costs. |