Closing Costs

When you get a home loan there are usually closing fees involved. These closing fees are broken down under two titles. First there are the fees that are normally associated with getting a home loan such as appraisal, credit report, recording fees, state taxes, title work, etc. that we call closing costs. You will also have fees called pre-paid items and these consists of items like your first years home insurance, money deposited into your escrow reserve for taxes and insurance, and pre-paid interest from the date of closing to the first of the next month. Normally these items combined will not exceed 3 to 5 percent of your loan amount.

Closing costs can vary greatly so it is in your best interest to compare in advance before choosing a lender. Most lenders will give you a good faith estimate in advance that will show costs involved so you can do a more accurate comparison.

One thing to be aware of when shopping for a mortgage is points. A point is 1% of the loan amount and is a fee usually charged to buy the interest rate on your loan down. Many times a point just becomes a fee that makes the lender more money rather than lowering your interest. Points are something I seldom recommend paying unless you know you will be in your home long enough to get back in interest savings the amount you will be paying in points. Points obviously increase your costs to get in a home and may cause you to borrow more money and take away from the advantage of the lower interest rate.

Please call or e-mail me about any questions that you may have regarding closing fees.

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