mortgage closing costs
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Home Financing & Mortgage Closing Costs – What You Need to Know best in 2023


When you’re ready to buy a home, one of the first things you’ll need to do is get financing. The type of loan you choose will affect the interest rate you pay, as well as the mortgage closing costs. In this blog post, we’ll discuss some of the most common types of home loans, as well as what you can expect in terms of closing costs.


mortgage closing costs
mortgage closing costs

What are mortgage closing costs?

When you’re a first-time home buyer, the process of securing a mortgage and closing on your home can be daunting. There are so many different fees and expenses associated with taking out a mortgage that it’s easy to feel like you’re in over your head.

In this blog post, we’ll take a look at some of the most common closing costs associated with conventional loans so that you can be better prepared when it comes time to sign on the dotted line.

Mortgage Closing Costs 101
Closing costs are fees charged by your lender at the close of your mortgage loan transaction. These fees can be paid by you, the seller, or split between the two of you depending on negotiations between buyers and sellers. Some common fees charged at closing include loan origination fees, appraisal fees, title insurance, credit report fees, and escrow fees and few more.

Loan Origination Fee: This is the fee charged by your lender for processing your loan application and generating your loan documents. This fee is typically a percentage of your loan amount and is generally paid at closing.
Appraisal Fee: An appraiser will visit the property you are purchasing to determine its market value. The resulting appraisal report will be used by your lender to determine whether or not to approve your loan.
Title Insurance: This insurance protects both you and your lender from any potential claims or liens against the property that you are unaware of at the time of purchase.
Credit Report Fee: A credit report will be pulled in order to help your lender determine whether or not you are a good candidate for a mortgage loan.
Escrow Fee: An escrow account is set up by your lender in order to ensure that property taxes and homeowners insurance premiums are paid on time. This fee covers the cost of setting up and maintaining this account.

Discount points: Discount points are prepaid interest that allows borrowers to buy down their interest rate. One point equals 1% of the loan amount.
City/state transfer taxes: When you purchase a home, you may be required to pay taxes on the transfer of property from seller to buyer.
Homeowners insurance: Most lenders require borrowers to purchase homeowners insurance as a condition of the loan. This insurance protects homeowners from damage caused by fire, theft, and other disasters.
Mortgage insurance: Mortgage insurance is required for certain types of loans if you’re making a low down payment. Mortgage insurance protects the lender in case you default on your loan.
Attorney’s fees: You may choose to hire an attorney to review your mortgage documents and represent you at closing.
Prepaid interest: Prepaid interest is interest that accrues from the date of closing until your first mortgage payment is due (usually 30-45 days after closing).

Is there assistance with mortgage closing costs?

If you’re a first-time home buyer, you may also be eligible for special programs that offer down payment assistance with financing and mortgage closing costs. These programs are typically offered by state and local governments, as well as non-profit organizations.

Check with your real estate agent or lending officer for more information about these programs.
Home ownership is a big financial responsibility, but it doesn’t have to be daunting. With careful planning and research, you can find a home loan that fits your budget and helps make your dream of homeownership a reality.

How I know In advance my mortgage closing costs?

All told, these costs can add up to several thousand dollars. However, there are some ways to prepare for them so that they don’t take you by surprise.

One way to do this is to ask your lender for a good faith estimate (GFE) of all of the anticipated closing costs before you even begin shopping for a home. This way, you’ll have a clear idea of how much money you’ll need to bring to the table at closing.

Additionally, you can also ask your real estate agent about any negotiating wiggle room there might be on these costs. In some cases, it might be possible to get the seller to pay some or all of the closing costs.

Can I negotiate my mortgage closing costs?

Finally, remember that mortgage closing costs aren’t necessarily set in stone. If you find that the actual costs are higher than what was listed on your GFE, you can always ask your lender to explain the discrepancy. In some cases, there might be a very good reason for it. However, if there doesn’t appear to be a good reason, you might be able to get some or all of the excess fees waived.

Conclusion:
Mortgage closing costs can seem like a lot at first glance but understanding what they are and why they’re important can help put your mind at ease come closing time. Be sure to work with your lender ahead of time so that there are no surprises when it comes time to sign the paperwork and officially become a homeowner!

Ready to start the process?

Have questions?  Give us a call!  (714) 248-8588. One of our VA loans mortgage specialists would be happy to answer all of your questions.

**Premier Home Financing, is not affiliated with or acting on behalf of, or at the direction of FHA, VA, USDA or the Federal Government.

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