The home buying process can be a rather complicated and frustrating process to go through. So it comes as no surprise that buyers often get surprised at just how much more they need to pay once a deal has been reached. This last step is called the closing cost. The closing cost process of buying a home is the last obstacle you need to jump through in order to get into your dream home. Therefore it is imperative that you understand the process in hopes that it goes smoothly. Read on to learn some helpful advice as well as a better understanding of the process.
How Much is Closing Cost?
The cost usually falls onto the buyer, but the seller will often need to pay a portion of as well. The cost usually ranges from 2% to 5% of the total cost of the home. You can choose to add this cost to your loan, but you will end up paying interest on it throughout the lifetime of it. Therefore it is highly recommended to simply pay it all at once in order to get it done with and not owe anymore in the future.
Closing costs aren’t just one thing rather a variety of parts from the total sale of the home. Let’s talk about property costs first. Property costs will usually include two main things, the appraisal of the home and the home inspection. You will need a professional appraisal of the property to ensure that you’re actually paying what the property is worth. The home inspection is needed to ensure that the property and the home itself is in good standings and does not contain anything taht will cost you later on.
The loan cost usually includes the fees related to documents needed to close on the deal as well as paying for any attorney fees you may have accumulated during the process. The biggest and usually most expensive of all the loan costs include the loan origination fee. This is what the lender charges for preparing your loan and submitting all your documents.
Lastly, you are going to see a sizable amount from the insurance on the home and mortgage loan. These will include your mortgage loan and mortgage application as well as any FHA, VA, and USDA fees.