Closing cost is something everyone who closes on a home has to face eventually. The Federal reserve states a good rule of thumb is to be prepared to pay 3 to 6 percent of house total house cost, depending on various factors such as loan amount and location.
What Are Closing Costs?
Closing cost are simply the fees associated in obtaining a mortgage loan. Some of these fees can include insurance, credit report, appraisal, attorney services, title insurance, and more. The catch is they don’t always have to be paid for by you! The closing cost can be covered by the lender, the seller, and the buyer, or a combination of all three. Coastlend Mortgage offers programs to give a closing cost credit as a thank you for your business, while sellers may contribute to attract buyers to their home.
Other Costs Associated with a Mortgage Loan
A few other fees may also be associated with a mortgage loan. Prepaid Interest, Homeowners Insurance, Property Taxes are all fees that could add to the final cost. Prepaid Interest are charges that accrue between the closing date of your new home and your first mortgage payment. Homeowners Insurance covers possible damages to your home, and usually a portion of it is paid at the time of closing. Meanwhile typically lenders will require that any tax bills that are due within 60 days of the time of closing be paid at closing.
Ways To Save On Your Closing Costs
- Compare cost on title companies, home inspections, and closing attorneys. Many offering these services have different price ranges, so shop around for quotes and find who will work best with you.
- Close near the end of the month. Timing your closing for the end of the month will help you save on prepaid interest. For example, closing on December 30th instead of December 15th will save you money that would have been spent on prepaid interest!
- Ask the seller to help with closing cost. It’s not an uncommon practice to ask the seller to cover some or all of the fees.
Call us today and ask us your questions about closing cost or what you can do to get pre-approved for a mortgage!