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What Are Buyer Closing Costs? |
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Written by Kathleen Chiras
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Sunday, 25 July 2010 07:52 |
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Buyer closing costs are the extra monies that you need in order to buy a home, in addition to the down payment. This phrase will come up when you are beginning to apply for a loan or make an offer on a home, You have several options regarding how and when you pay these fees.
by KathleenChiras
Buyer closing costs are the extra monies that you need in order to buy a home, in addition to the down payment. This phrase will come up when you are beginning to apply for a loan or make an offer on a home, You have several options regarding how and when you pay these fees.
There are various buyer closing costs:
There are several different fees and charges that make up buyer closing costs. The fees will all be listed on your Buyers/Borrowers Closing Statement, and you can ask any remaining questions during closing. The closing meeting is kind of a whirlwind because there are so many documents to sign and discuss. Oftentimes people go through each document line by line with their buyer's agent before the meeting. Here's what to look for in your closing costs:
Fees for the Appraisal
Fee for the Credit Report
Loan Interest
Home Owner's insurance (1 year up front)
Property Taxes (1 year up front)
Closing Fee to Title Company
Title Charges (owner and lenders policy)
Water Transfer Fees
Your exclusive buyer's agent will be able to give you an estimate of the closing costs before you make an offer. That way, you can budget appropriately.
Most of these fees and charges cannot be reduced. However, you can shop around for home insurance. This can make a big difference in you closing costs.
When are buyer closing costs paid?
They are paid at the closing. They will be included as a lump sum along with your down payment, which is typically paid with a cashier's check or by wiring the funds.
There are a couple of different ways to pay your closing costs.
You can pay your own closing costs, or you can ask the seller to pay them. You will make this decision when you make an offer on a home.
If you ask the seller to pay closing costs it generally increases the sale price of the home by the same amount. For example, you could offer $210,000 on a home and pay your own closing costs of approximately $5,000. Or, you can offer $215,000 on the same home, and ask the seller to pay your closing costs.
Both options have pros and cons
A big positive is that you will not have to have the cash for these fees at your closing meeting. A negative is that you will be paying interest on your closing costs.
Pros to paying the costs yourself at closing: When you pay in "cash", you don't have to worry about getting a bigger loan to finance these costs. Cons: You will need to budget for these costs along with costs to move, any repairs that need to be made to the home before moving in, and down payment.
You may wish to discuss the pros and cons of your situation with your agent to decide the best course of action. It is wise to look for homes in a price range that also takes into consideration the closing costs.
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