Lets Talk Closing Costs
When buying a house, there are two words that can’t scare a buyer more than closings costs. But just what are closing costs and why do buyers need to consider them when searching for their mortgage company?
Because buying a home is a contract between the seller and a buyer, and the property changes hands, there are several people and costs involved. For example, the attorney who oversees the contract will have fees, as will the appraiser, underwriter, and inspectors. There may also be fees for title searches, surveys on the lot, credit report, and there could also be closing costs for mortgage applications.
In general, there are four categories of Closing Costs:
1. Lender’s Costs to get a Home Loan will include the costs to pay the processor, Underwriter and Loan Closer – these are normally labeled a “Commitment Fee” in North Carolina.
2. The lender does not charge Third Party loan costs expense, such as a credit report, Flood Zone Certificate, and property appraisal, but are costs paid to third party vendors.
3. Legal Fees, such as the Closing Attorney’s cost, Title Search, and Recording the Deed transfer at the county courthouse. The lender does not select the attorney, so these fees can vary based on the attorney you choose.
4. Pre Paid Expenses – ongoing costs of home ownership include home owner’s insurance and property taxes that get paid at closing.
There are also mysterious “points” to consider. “Points” are simply paying more money up front to get a lower rate on the mortgage. A Point is typically 1% of the loan amount. and it usually allows you to get a rate that is 0.25% lower than if you didn’t pay points. If you want a lower interest rate, we can talk with you about several ways to make that possible to avoid having to pay these closing costs.
In North Carolina, closing costs on a $200,000 house typically run a buyer around $2500. North Carolina, according to a recent survey, has the second lowest closing costs in the country. In the Carolinas, it is not uncommon for a seller to pay for all closing costs, but only if you write that in your offer to purchase a house. A good agent will likely be able to negotiate well for you, but the more you know before you apply for your mortgage the better. Call Fairway Independent Mortgage of the Carolinas today to ask one of our skilled loan officers how we can get you on the road to owning your new home. We will explain all the costs involved up front and ensure there are no surprises at closing.
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