It’s one of those things that a lot of home buyers don’t really think about: closing costs.
Often, the thought of closing costs is drowned out by such questions as: What neighborhood do I want to live in? How many bedrooms to I want my next home to have? What school district do I want my kids to be in?
However, if buyers plan to prepare for closing costs, they could find themselves extremely overwhelmed when they learn how much money they owe at the time of closing.
For this reason, I’m going to spend today’s blog telling you about what is included in closing costs and how much it usually costs buyers.
Investing in Plymouth, MI Real Estate
The first thing you need to know about closing costs is that most of it is related fees that the mortgage lender was charged by a third-party company.
These are then passed on to the buyer to cover.
Generally speaking, closings costs account for between two and five percent of a home’s sales price.
These costs cover such expenses as:
- Appraisals
- Surveys
- Title insurance
- Title searches
- Obtaining a credit report
- Processing paperwork for the loan
- Legal fees
- Home inspections
- An escrow deposit
- Recording the transaction in the city or county’s records
What’s more, buyers have the option of increasing their closing costs and simultaneously lowering their mortgage’s interest rate through discount points.
This option ultimately saves the borrower money over the life of the loan.
As previously mentioned, closing costs are most often paid for by the buyer, although sometimes the seller may cover some or all of the costs if it’s specified in the contract.
There are even third parties that absorb portions of the closing costs for the buyer. For instance, if a home is purchased with a Veterans Affairs (VA) loan, the seller will pay some of the closing costs.
But beware of lenders who promise you zero closing costs. After all, nothing is free and usually these lenders have built those fees into the structure of the mortgage.
Helping You Buy a Plymouth Home for Your Family
One last bit of advice on closing costs for now: If you want to anticipate how much you’re going to ultimately pay in closing costs, you can request a good faith estimate from your lender.
Law dictates that this estimate must not deviate any more than 105 percent from the actual price, so it will give you a good ballpark estimate.
Hopefully you found today’s information helpful as a prospective home buyer.
For more useful tips on navigating the Plymouth real estate market as a buyer, please make sure to contact us at The Bittinger Team.
We’re here to help you every step of the way, starting with telling you about available listings in Plymouth!
Until next time,
Noel
Explore our website: www.Bittinger.com
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