What Are Mortgage Closing Costs?
Updated: Oct 7, 2020
How much is closing on a house in Hampton Roads really going to cost you? It's an important factor to consider when setting your budget for buying a home. Our team at CPG Real Estate Consulting is delighted to share this guest blog post with you courtesy of First Heritage Mortgage!
When considering the out-of-pocket expenses needed to purchase a home, a common misconception is that you will only need to cover the down payment. Many home buyers find at the end of the home buying process that they did not account for a necessary expense – the closing costs.
To avoid any unwanted surprises during your home purchase, it’s important to understand what closing costs are, how much they cost, and who pays them.
What Are Closing Costs?
Whether you are purchasing or refinancing a home, you are required to pay closing costs. Closing costs are comprised of various fees required to finalize a mortgage.
Below are the services and fees your closing costs may include:
Mortgage insurance fees
To review a thorough breakdown of these closing costs, click here.
Under the Truth in Lending Act (TILA), your lender will provide you a loan estimate outlining your closing costs within three business days of taking your loan application. After receiving the loan estimate, you should ask your lender any questions you may have regarding the various fees.
How Much Are Closing Costs?
As a rule of thumb, the average closing costs run between 2-5 percent of the loan amount.
For instance, if the purchase price of a home is $350,000 your closing cost fees would typically range from $7,000 to $17,500.
Who Pays The Closing Costs?
Homebuyers typically pay closing costs, but in some instances you may choose to negotiate these fees, like title insurance or other inspections, with the seller of the home. A seller is more likely to cover the closing costs if their property has been on the market for a long time, isn’t getting many offers, or if they are on a time crunch to get out. Either way, it doesn’t hurt to ask.
Depending on your financial background and where you live, you may qualify for closing cost assistance paid for by a government agency. You should always check to see if you qualify for assistance when purchasing a home, especially if you are a first-time home-buyer.
THE BOTTOM LINE:
Don't forget to factor in these closing costs when buying a home or applying for a mortgage loan. Talk to a loan officer today or contact a real estate consultant to help you get started in your search!
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First Heritage Mortgage, LLC is an Equal Housing Lender. Company NMLS ID #86548 (www.nmlsconsumeraccess.org) . This is not financial or credit management advice. The included content is intended for informational purposes only and should not be relied upon as professional advice. Consult with a finance professional for tax advice or a mortgage professional to address your mortgage questions or concerns. This is an advertisement. Prepared 9/4/2019.