What Mortgage Costs Can I Expect When Purchasing a Home?
When first time buyers are preparing to purchase a home they usually only focus on the down payment for the house. Home buyers need to meet with a mortgage lender early in the home evaluation process to understand costs with borrowing. There is so much more than the down payment that can eat away at your nest egg!
This is an area most RI real estate agents leave on the table for home buyers! Get it out there and be clear with your clients what the true monetary costs will be for a home purchase.
No surprises for your clients are needed. To honor their needs is so important which is why a mortgage lender, such as me Geoge Soutu, and real estate agents need to work hand in hand with the home buyer.
Mortgage costs not only come as a surprise to First Time Home buyers, but the total amount of the Closing Costs can
be a major shock. Yes, there are ways to cover Closing Costs without the Borrower(s) using their own
funds For example, as Down payment & Closing Cost Assistance Programs (DAP), but the shock of hearing
about these costs for the first time can really be sobering. I am always prepared for this initial shock home buyers get. I know I, as a mortgage broker, have to take the time to fully explain these unexpected mortgage costs.
Once Closing Costs are explained correctly, and Borrowers understand them, the initial shock normally goes away.
The bulk of Closing Costs are not Lender Fees. The bulk of the Closing Costs are third party fees which are mostly fixed fees, and generic to all mortgage loans. The exceptions would be funds required for escrows, points, and prepaid interest which
fluctuate based on the price of the property.
As a result the percentage of Closing Costs are higher on lower price properties than on higher price properties.
Below is a list of the Closing Costs most common to all mortgages:
• Application Fee/Processing Fee
• Appraisal Fee
• Attorney Fee
• Title Insurance Fee
• Recording Fees
• Daily Interest Charge
• Homeowners Insurance
o Real Estate Taxes
o Homeowners insurance
There could be other Closing Costs which are less common such as:
• Points (are you paying monies to buy down your mortgage rate?)
• Credit Report
• Flood Certification
• Funding Fees
• Condo Questionnaire Fee
• Re-inspection Fee
These costs can easily add up to several thousand dollars regardless of the loan size, because as I stated before, most of these closing costs are fixed costs.
But as shocking as hearing about Closing Costs can be, finding out about costs buyers will incur before the Closing can be equally a bigger shock (home inspection, radon inspection, well, wood boring inspection, etc.). I will cover these additional costs in another blog shared with Ginny Gorman and her Rhode Island coastal real estate readers. Being informed of closing costs makes you better prepared to buy your home.
Info about this guest author: George Souto NMLS# 65149 is a Connecticut Mortgage Loan Originator who can assist you with all your FHA, CHFA, and Conventional #mortgage needs in Connecticut. George resides in Middlesex County Connecticut. George can be contacted at (860) 573-1308 or firstname.lastname@example.org.
I am pleased to have George be a guest contributor to my web site with his wealth of mortgage knowledge. He is an expert on mortgages and lending practices and is a great resource for all real estate agents throughout New England.