Buying a home can be one of the most exciting times of your life, but it can be one of the most stressful if you don’t have all the information you need. Most home buyers are not aware of the details when it comes to closing costs. These cost typically come out-of-pocket, you it’s important to know more about them and what will happen during the closing part of your real estate transaction.
Before the closing, there are many things that must take place. In order to buy the house, you’ll seek a home mortgage loan from a lender. The lender, usually a bank, will check your credit worthiness and ask for a professional appraiser to take a look at the house. The house will undergo an inspection to make sure everything is working correctly. There will be independent inspections for insects and surveying purposes.
Attorneys and other professionals are needed to make sure the title for the home is free of restrictions. They will take care of transferring the title to you when the time comes for that part of the process. Clerks will be on hand to do the paperwork. All of the steps before the closing have fees that are calculated and added to the closing costs. It’s for this reason that the closing costs are not determined by just one person and may be difficult to estimate. This is why you need a qualified real estate agent to help you during the purchase of your new home.
You’ll want to read the estimate of closing costs that you receive from the bank with care. Make sure there are no inflated costs for such things are couriers. Remember, you have the right to accept or decline the loan offered and go elsewhere for your home mortgage.
It may help to know that closing costs are approximately two to five percent of the purchase price of the home. In some cases, they may be closer to eight percent. Once you make an offer on the house, the lender has a few days to provide you with a good faith estimate. This estimate may change as you go through the home buying process. You’ll want to be prepared in case the actual costs differ. The day before your closing, the lender will provide you with an actual list of closing costs.
While most lenders require the home buyer to pay for closing costs out of their own pocket, there are cases in which the lender will add the closing costs into the mortgage loan. This may sound appealing to you at first glance, but having the closing costs added to the loan amount means that you’ll be paying more in the long run due to interest costs.
It’s common for sellers to cover a portion of the closing costs if that is negotiated and included in the contract. If you find yourself in the middle of a bidding war, being willing to pay the entirety of the closing costs may be the factor that gets your offer accepted. If your offer includes the seller paying a portion of the closing cost, they may decline that option. Again, this is where having a real estate agent to help with negotiations is a key to success.
When purchasing a new home, you may be asked to make a deposit of good faith, provide a down payment, and cover closing costs. Avoid stress by making sure you’ve saved an adequate amount and have the budget to cover these and other unforeseen costs.
Call The Wright Choice Team today at 804-307-2589 to tour available homes for sale in the Chesterfield County area.