When you’re buying a home there are tons of new terms and processes you’ll be learning as you go. More than likely one of those terms will be “closing costs” and you might think to yourself, “great, more money.” We know this is an exciting time, but it would be good to take a moment to familiarize yourself with what makes up closing costs.
Closing costs can be broken down into lender fees, title fees, government fees and third-party fees. Lender fees are set fees regardless of the amount of the loan. Regulations are put into place to limit the amount lenders can charge in closing cost fees. Title fees deal with the title insurance based on the amount of your home and vary based on the loan amount. Government fees can include recording fees and transfer taxes paid to the county. Finally, third-party fees can include appraisal fees and credit report fees and will vary depending on the type of loan, type of home and if the property is an investment property versus an owner-occupied residence.
Closing costs range anywhere from 2-5% of your home’s total purchase price; the following is not an exhaustive list, and the amounts will vary. However, you will have a precise breakdown of your closing costs when funding your home.
Closing Fee -charged by the title company
Real Estate Taxes and PMI Escrow Deposit
Pre-Paid Hazard Insurance
Up-Front FHA MIP -applicable only on FHA loans
Flood Certificate Fee
Recording Fees -for issuing a new deed
Transfer Tax -vary by county
HOA Transfer Fee
Pest Inspection -required for all government-backed loans
Title Search Fee
Loan Origination Fee
Wire Transfer Fee
VA Funding Fee -applicable only to VA loans.
By staying informed you will be on top of your game which can help the process run smoothly along the way. Unfortunately, closing costs are a part of the process, but in relative terms, it’s a small price to pay for getting a new home.
Find out how much you qualify for by applying for a home loan with us today.
The Certo Team 55 N. Arizona Place Suite #103 Chandler, AZ 85225 602-429-6789
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