What Closing Costs to Expect if
You're a First-Time Home Buyer
There's a lot of things to learn and know when hoping to become a First-Time Home Buyer. It can all seem a bit overwhelming ...
Closing Costs: Closing Costs are one of the most important things you must know as part of your upcoming transaction and financing.
And while everyone's transaction may have costs specific to it (or the locale of the property), there are some costs that are pretty much basic and universal to every transaction.
Below is a comprehensive list of those costs charged to most Home Buyers as part of obtaining a mortgage loan. First-Time Home Buyers should count on these basic costs as part of their fee faced at the consummation of their transaction.
Those Closing Costs are:
- Lender Application Fee .. OR .. Appraisal Fee
- Appraisal Fee (Paid @ Application) If not Application Fee
- Credit Report (Paid @ Application OR @ Closing)
- Tax Service Fee
- Flood Certification
- Home Inspection (Paid @ time of Inspection)
- Lender's Origination Fee (Paid@t Closing)
- Title Fees & Title Insurance (Paid @ Closing)
- First Year's Homeowners Insurance Premium (Paid @ Closing or immediately prior to)
- Possible Cost: Homeowner's Association Documents & Questionnaire (If Applicable)
- Recording Fees (Paid @ Closing)
- Transfer Taxes (These vary by City, County, State ... and by terms of Contract) Often paid by Seller.
- Attorney Fee (Common in Illinois. Paid @ or after Closing)
The sum total of these items: The total can be between $4,500 and $6,000, depending on the Vendors used to complete the Services ... and what the Lender charges.
Please Note: These costs are in addition to any down payment a Buyer may have to produce to purchase their home. In some states, portions of these costs are "offset, or credited by the seller", such as Title Fees and Real Estate Tax Prorations.
Buyers may ask: That part, or all, of these costs be paid as a credit at Closing to the Home Buyer, (Subject To Guidelines).
The need for Seller-Paid Closing Costs should be determined with your loan officer at the time of Pre-Approval ... not after the offer is made to purchase a home.
Asking the Seller to contribute to these costs upfront is usually the best course of action. In these cases, Home Buyers can cover their Closing Costs in part, or entirely, by the Seller, as per the negotiated Contract.
Once again: The above info and methods are common to the Chicagoland/Illinois area. Other areas/states may have varying costs/amounts due to local customs and practices.
Bottomline: It's wise to have a conversation regarding credit, finances, down payment needs, and possible Closing Costs with a Mortgage Lender well in advance of beginning your home search.
That way you are educated, prepared, and well-positioned financially for your home purchase and financing ...
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