Closing the deal is always the best part of the home-buying or selling process, and you may be surprised to learn that fees are associated with it. The good news is that your real estate professional will inform you about the closing costs before you complete the real estate deal.
However, the average person who wants to buy a home may be shocked to learn that he has to pay more after paying the down payment. His Northridge real estate agent tries his best to explain why the process is crucial, but he is unhappy because he wasn’t informed beforehand.
Don’t be the average person; learn about closing costs so you won’t have any “unpleasant surprises” when you apply for a loan. In this blog, you will learn about closing costs and why it is significant.
Why is closing cost important?
During the loan application and deal closing stages, many parties are involved, such as real estate professionals, insurance companies, legal entities, an escrow company, etc. It ensures that ownership is legally transferred without disputes from both parties.
What is the closing cost?
Closing costs refer to the fees or charges you pay after the purchase or sale of an asset. You pay closing costs because of your loan, attorney fees, survey fees, escrow fees, taxes, and commissions for your local real estate agent in Northbridge, Ca etc. Your lender provides you with a loan estimate that contains the estimated closing cost and other loan details. The actual amount may change during the time it takes you to secure your home, but you will get a closing disclosure form that shows changes in the closing fees three days before completing the deal.
Closing costs can be up to 2-6% of the home’s purchase price. That means if your home is worth $400,000, you can expect to pay $8000- $24,000 when you close the deal. Who pays the closing cost? The buyer or the seller? Actually, both parties pay at the end of a successful deal.
Common types of closing costs.
These fees vary from state to state, and you may not have to pay for some of them. For example, you may not have to pay courier fees if parties handle the closing digitally; or you may not pay homeowners association fees if you buy a single-family unit.
- Loan application fee
- Attorney fee
- Closing fee
- Homeowners association fees
- Lender’s title insurance
- Property tax
- Courier fees.
- Owners title insurance
How do you lower closing costs?
There are some ways to reduce and save money upon closing your deal. One such way involves comparing lender fees before applying for a mortgage. You can find mortgage lenders with great rates and low closing fees. Another way to save money is by doing your homework and hiring inspectors or insurance agents outside the recommendation of your lender. You can also opt for a no-closing-cost mortgage, but this usually means a higher interest rate. Lastly, you can solicit help from the seller to cover some of the fees.