YOU ASK:

What are the closing costs on buying a house?

WE ANSWER:

When buying a house, you should know that there are other costs aside from the down payment. This will help you determine just exactly how much you need so that you can start the process of buying a house. That means that you should not just save up for the down payment but for what are called closing costs and it may surprise you that there is a long list of these costs!

Aside from the down payment, here is a list of the costs involved in the purchase of a house:

  • Title insurance (both for the bank and for the borrower or prospective homeowner. The lender's title insurance is required if you need a mortgage while a homeowners title insurance policy is optional.)
  • Loan application fees
  • Credit reports
  • Title search fees
  • Points
  • Attorney's fees (for the lender's, buyer's and seller's attorneys)
  • Appraisal and processing fees by the lender
  • Homeowner's insurance
  • Private mortgage insurance
  • Survey and inspection fees
  • Recording fees
  • Escrow deposit for homeowners insurance and taxes
  • Partial month's interest

These closing costs sometimes reach from 4.5% to 17% of the amount of the mortgage and this does not include the down payment amount. Your lender will also provide you with a Good Faith Estimate with regards to the closing costs.

What you should do is to negotiate with the seller of the house to discuss who should pay what items of the closing costs.

These closing costs can prove to be quite substantial, because of the fact that you already have to come up with the deposit amount. Now, if you don't have the money to cover the closing costs, what you can do it to roll in the closing costs into the mortgage. This means that aside from the loan, you can also borrow the amount you need for the closing costs.

For example, if you are applying for a loan amount of $150,000 and it is determined that the closing costs would equal $4500, you can apply for a loan of $154,500.

Was this question and its answer useful?
Not a bit
  • Currently 5/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Very useful
Have a question about insurance? Ask the experts
Share: