The cost associated with the home buying and home loan at the Closing of a real estate transaction is known as closing cost. At this point the property is transferred from seller to buyer. This cost is determined by either buyer or seller.
The rate of closing cost depends on many factors such as, the location of the property, the type of property you buy and the type of your mortgage.
Home buyers generally pay 2 to 5% closing cost as compared to the purchase price of the home. So if the price of your home is $ 150,000, you might pay $3000 to $7500 as the closing cost. On an average, people generally pay around $3700 as the closing cost.
Your lender will give you a Loan Estimate, which will tell you how much the closing cost will be on your home. However, many of the fees listed in it may change. In case of any change, your lender will send you a revised Loan Estimate so that there’ll be no surprises.
The closing cost incurred by your lender is negotiable, because they often include unnecessary charges in it. You have always the option to research before choosing your lender, because there are lenders who offer you a loan with low fee at closing.
It is the responsibility of your lender to give a statement at least three days before your closing which states your closing cost. You can compare this cost to the cost mentioned in Loan Estimate and discuss it with your lender in case of any variations. There is an amount of increase which can be made on closing cost as compared to the cost mentioned in Loan Estimate so there shouldn’t be any surprises. But if there are, you can talk about them.
Also there is always an option of choosing a mortgage plan with no closing cost, which will enable you a loan amount without any charges at the time of closing.
However, if you choose this type of mortgage plan you often end up paying more or less same amount in the long run. Because the lender may charge you high interest rate on your mortgage or they may wrap the closing fee in the total mortgage you owed, in which you end up paying the additional amount.
Home buyers can also discuss the closing with sellers because sometimes they agree to assume buyer’s closing cost.
The post What are Standard Closing Costs and how much should you estimate? appeared first on Avon Financial.
