When a home sale is completed and the title of the property is conveyed to the buyer, it is referred to as “closing:” There are typically a variety of costs that come with the transaction that are paid for by either the buyer or the seller. These costs are also usually paid at the time of “closing”.
Down Payment: Other than a VA Loan or a Rural Housing Loan which do not require a down payment, most lenders will require a down payment. Plan for at least 3.5% – 5.0 % of the purchase price depending on your loan.
Loan Origination Fee: Based on who you are working with, the amounts will vary, however an Origination Fee is paid to the loan officer who initiates and completes the loan transaction with the home buyer.
Points: Points are charged by the lender as an alternative to charging a higher rate of interest on the mortgage loan. One point equals one percent of the loan principal.
Home Inspection: Some lenders require an inspection to verify that the home, which will be used as collateral, is in good condition and will retain it’s value.
Appraisal: Some lenders require an appraisal of the value of the home to ensure that the sale price is equal to the actual fair market value of the home.
Private Mortgage Insurance: If loans where more than 80% of the home value will be mortgaged, some lenders will you to have PMI. This insurance will protect the lender in the event of a default on the loan.
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