When you are buying a home, you’ll have to pay closing costs. However, the amount may vary; typically, buyers are responsible for paying closing costs that total between 2 and 5 percent of the home’s total value.
But what goes into closing costs, and do you always have to pay them when you’re buying a home?
What Are Closing Costs?
The term closing costs refers to the fees lenders and third parties charge buyers. Usually, buyers pay these fees that when they sign the final paperwork on their mortgages. However, in some cases, closing costs can be waived or rolled into the total cost of the mortgage.
Some of the typical fees included in closing costs include:
- The credit check fee
- A loan origination fee, which is what lenders charge for processing paperwork for you
- An appraisal fee
- A survey fee
- Title insurance
- Escrow deposit
- An underwriting fee, which pays for up the lender to evaluate your loan application
- A recording fee payable to the city or county so they can record new land records
- Attorney’s fees
- The bill for a home inspection
- Discount points, which are fees you paid in order to get a lower interest rate
How Do You Know What Your Closing Costs Will Be?
Under federal law, lenders must give you a good faith estimate that tells you how much your closing costs should be within three days of your loan application. However, it’s important that you remember many of the fees listed on the good faith estimate can change by up to 10 percent by the time you close on your mortgage.
Within one day of closing, your lender is supposed to give you a HUD-1 statement that outlines your exact closing costs. You can compare it to your good faith estimate and ask your lender to explain the differences.
Are You Buying a Home in North Florida?
Call us at 386-243-0124 or get in touch with us online. We’ll begin a custom search for properties that meet your needs and explain the entire home buying process.