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Understanding Closing Costs in 2017

Understanding Closing Costs in 2017
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Buying a new house may be an exciting prospect, but before you sign on the dotted line, you should understand that buying a house usually costs more than the sticker price. Referred to as closing costs, there are several essential service fees you’ll need to cover to finalize the purchase of your home. Let us help you get the best deals by giving you some tips on how to stretch your closing cost dollars.

Understanding the Basics of Closing Costs

By most estimates, closing costs may add up to 3% to the final purchase price of your home. These necessary service fees are charged by a variety of people involved in the important process of finalizing the purchase of your home, including those that come directly from the mortgage lender as well as several third parties. Refer to the sidebar on the right of this page to see a brief breakdown of the basic closing costs you’re likely to see.

Keep in mind that the particular closing costs for which you will be responsible will depend on where you’re purchasing, the service provider you’ve chosen to work with, and the sales contract terms. And remember: your lender is required to provide a list of estimated closing costs before your closing date.

Generally it’s a good idea to involve a lawyer during the homebuying process in order for you to cover all of your bases, and you’ll need to pay the lawyer for their services, as well.

Stretching Your Closing Cost Dollars

There are several ways to keep your closing costs to a minimum. Follow these tips to make your money go further during the final stages of buying your new home.

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Compare offers from lenders

Before you select a mortgage lender, be sure to do your homework by asking about more than just interest rates. Many lenders provide incentives in the form of lower closing costs, which can save you more than you would shave off with a lower mortgage interest rate. Get several offers and compare them on every closing cost to get an accurate picture of which one is the most affordable.

Negotiate for third-party services

Don’t be afraid to ask for a reduction in fees from third-party service providers, such as your attorney, property surveyor, appraiser, or inspector, and so on. It doesn’t hurt to ask, and often these providers are willing to lower their rates to get your business.

Provide a larger down payment

Often, when you put down less than 20%, you’re required to pay extra mortgage insurance premiums depending on the size of your down payment. You could save big on insurance fees by putting down more than 20%.Usually calculated as 1% of the amount you’re borrowing, points are a way of buying down the interest you will pay on your mortgage. If you need to save up front on closing costs, lower the number of points you plan to purchase. Conversely, if you want to save more on interest for several years, increase the number you buy.

Opt for monthly insurance premiums

In the past, lenders required you to pay a one-year premium for mortgage interest at the time of closing plus two months towards the next year’s premiums. However, today you can opt to pay monthly instead, which can significantly lower your up-front costs.

Knowing what closing costs you have to pay and comparing offers from several companies is a great way to make your house-buying experience more affordable. And once you have closed on your new home, breathe a sigh of relief with the money you have saved–welcome home!


For more information on calculating closing costs, visit your local title companies:

San Jacinto Title Services of Texas
www.sanjacintotitle.com

Sierra Title
www.sierratitle.com


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