What Are Typical Closing Prices for First-Time Home Buyers?
Purchasing a home can be a costly endeavor. In addition to the cost, the purchaser is responsible for closing costs in order to finalize the transaction. You need to make sure you’ve got access to sufficient cash to pay for these final prices –so, it is essential to budget for these costs while searching for your first home.
Closing costs are fees billed by different parties connected with a home purchase. Your creditor, the title company, your regional taxing authority and insurance companies are parties that often require closing costs in a real estate transaction. Closing costs typically run 2 to 5 percent of the cost of the home.
One-Time Closing Costs
Many of the closing costs are one-time closing expenses. Home buyers cover these costs at closing and don’t have to worry about them . One-time closing costs include title insurance, name search and attorney fees, in addition to escrow fees, which cover the price of setting up an account with your creditor to collect the regional taxes and homeowners insurance on a monthly basis. Other fees that you pay once include courier fees, appraisal fees, wire fees, recording fees, transfer fees, document preparation fees and credit check fees.
Recurring Closing Costs
Recurring closing costs also have to be compensated on a real estate transaction. Home buyers pay these fees once at closing and then again on a regular basis. Some recurring closing costs include flood insurance, private mortgage insurance, fire insurance and real estate taxes.
Good Faith Estimate
When you start the loan process, your lender will give you a list of expected fees. This list of fees is called a good faith estimate. The Real Estate Settlement Procedures Act requires lenders to give borrowers a GFE within three days after applying for a mortgage loan. The GFE gives you a good estimate of the amount of money you may expect to deliver to the closing table. Broadly , the fee quotes on the GFE should carefully match the HUD-1 closing statement, so you are not surprised when you arrive at the closing. However, there is some allowance for variance in a number of the final costs, such as property taxes and interestrates.
As a first-time home buyer, it is very important to become knowledgeable about the funding process. In addition, to the the home’s purchase price, you will have to come up with a deposit and various closing costs. Working together with both a respectable realtor and lender will help you to browse through the real estate closing process and know how these costs can influence the affordability of your first home.